Fintech startups are breaking down barriers to moving money around online, making it easier to start an internet business, receive funding from a global audience of investors, and send money to friends overseas.
London’s fintech cluster is at the heart of a lot of this innovation, and what’s exciting about the capital is that fintech innovation is begetting fintech innovation. In a typical “build it and they will come” fashion, fintech startups are attracting more would-be fintech entrepreneurs. Building a startup is hard, but for anyone considering building the next TransferWise or Seedrs in the UK, following a handful of tried and tested principles will help you scale faster.
Users’ expectations change faster than your business model
Historically, the world of financial services was owned by large banks that owned the vast majority of products available to consumers. Any investment was focused on making things more profitable rather than improving customer experience or innovating. This meant that things such as payments, current accounts and online banking got left behind.
Today, however, the rate of change is dizzying and clear to see across mobile payments, NFC, challenger banks, robo-advisors and more. Spoiled for choice, our expectations are constantly being raised by new challengers in the space who focus on a single product and deliver on it. Keeping up with the pace of change should be paramount for any fintech entrepreneur, so working with partners who will help you execute rapid responses to new industry developments, such as Apple Pay and the latest in machine learning technology, will be fundamental to getting ahead.
Make it easy for your customers to pay in
Fintech startups risk leaving revenue on the table if they don’t make it as easy as possible for their customers to pay in. Ask yourself, do customers have to log in to their own current accounts and do a bank transfer with a reference code? Not ideal if they’re on mobile. You might as well ask them to send a cheque!
Make sure the way you take money from your customers is compatible with how they use your product. Learn from the likes of Monzo, and make it easy for them to add funds quickly with a debit card and a simple mobile checkout flow.
Optimize for recurring payments
Fintech entrepreneurs are building products that collect loan repayments or regular top-ups from investors. To optimise this process, it’s important to securely store customer payment details and choose to bill cards at specific frequencies. Fintech startup iwoca is a good example of a business that does this well, to collect loan repayments more efficiently – this functions as a strong driver of sustained growth by allowing them to lend more money out faster. Recurring payments are an amazing (and under-utilised!) growth compounder for fintech startups.
Focus on your core product, outsource the rest
If you’ve set up your own fintech business, there’s a fair chance that you did so with a singular purpose in mind, such as lowering the cost of international money transfers or allowing friends to split a restaurant bill. As a startup, it will be crucial to focus on your product and not periphery tasks. You can do this by using ready-made tools, which means you won’t need to become a master at PCI compliance, or design your very own machine-learning system to prevent fraud.
Kickstarter is good role model. Since its inception, over 100,000 projects have been successfully funded around the world. This puts huge demands on the Kickstarter platform, such as KYC and AML checks on the projects, receiving funds from project backers, and then transferring out the funds to accounts based all over the world. Kickstarter managed to expand so quickly internationally by integrating Stripe Connect to complete KYC/AML checks for them, and automate their entire international flow of funds.
Keep it simple
21st century finance has simplicity at its core. Just as Apple did with the iPhone a decade ago, it’s not about removing features, but about increasing the usability of those features through an intuitive user experience. Design your product with the customers’ intentions and desired outcome in mind, rather than just to perform a utility function.
Nutmeg makes it easier for people to invest by using a simple, goal-oriented user interface. People associate the money they save with a specific goal, such as a house deposit or a new sofa. Instead of just putting it all in one pot, it’s attached to specific goals, which motivates people to save more and track their progress.
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