Main challenges FinTech companies have to overcome
If you think it’s difficult to manage a start-up, it is so much harder to deal with start-up in fintech industry. This type of business has a number of challenges to overcome: starting from finding competent team members that are able to deal with complexity of the projects, coping with international regulatory requirements and finishing with potential clients that are used to traditional services received from banks. Whatever business you choose, processing payments, currency exchange, crowdfunding etc., you have to be better than traditional financial services firms in order to compete with them and actually succeed. It’s hard to say how this financial revolution will unveil but it is clear that some obstacles still need to be overcome.
One of the most sensitive subjects is current increase in regulations and overall complex regulatory environment. After the Market Crash in 2008, policymakers were forced to shift their focus on making financial industry safer. This was the initial point that lead the way to new regulations that are being created to restore the confidence in financial industry. These regulations are difficult and complex as they are, but going beyond your home country and working internationally can make them so much more difficult and expensive to deal with.
Further, fintechs are in constant competition with conventional banks. And these banks are not planning to step down without a fight. They are heavily entrenched and still have much bigger database of clients compared with fintechs. So it’s a very challenging battle to be fought.
Creating a team in fintech company is not the easiest job either. Industry professionals say that companies that employ ex-industry practitioners are able to deliver much better results. Mostly, because of the fact that they work on clearly defined problems and look for solutions missing in conventional market. Another important point is that like anywhere else, it’s important to know the rules before you can improvise and break them. While working in fintech, you have to have very strong know-how if you are planning to deliver sophisticated products and disrupt the industry.