The FinTech industry is on the rise – investments are increasing steadily year-over-year and technology is evolving rapidly. Although there are claims that the boom of the industry might be a bubble, statistics are clear – 42% of the world population (or approximately 2 billion adults) still don’t have access to a financial system. And with the global investments in the industry reaching $31 billion in 2017, the opportunity for FinTech companies to succeed seem plentiful. The huge market potential and the fact that there are plenty of funds to be invested, pave the way for new and existing companies to innovate, develop and grow. Yet, the numbers reveal that the failure rate for bootstrapped FinTech startups stands at 90%. Why? There are a few risk factors for FinTech companies.
The truth is that the huge potential within the sector and the significant investment funds are appealing to many. So much so, that new FinTech companies are permeating the market. This means that it’s highly competitive at the inception stages but many won’t pull through. Deloitte sights the competitiveness of the FinTech sector is considered one of the main reasons why in the last two years, the number of startup companies is actually decreasing while the established number of FinTech companies are increasing.
For FinTech companies to survive in such a cutthroat environment, it requires sustainable planning and efficient risk management. Being able to prevent or control the biggest risk factors influencing success is key.
These Risk Factors Include:
- Product & Market Risk: According to an interesting research finding by CBInsights, the main reason why startups fail is the lack of market need for their products. Often FinTech ventures are guided by the pure desire of immediate success. They rush to execution and this prevents them from being able to clearly define their product advantages against the competition.
- Execution Risk: The technology and the processes behind the development of the product is of crucial importance and should be figured out in an early stage, along with defining the entire concept. Often, technology and execution are the main drivers behind the success of a business. You don’t always need to have the most innovative idea. Sometimes, all you need is to optimize – do things faster or better. On the other hand – if a company has an idea so powerful to revolutionize a field, but at the same time lacks good execution, the project will simply not live up to its potential.
- Hiring the Wrong Team: When it comes to software development, this type of risk is one of the most important ones and often is considered relevant to the amount of financial risk that a company may be exposed to. Failing to surround yourself with the right people and building a team of experienced and proactive professionals often equals failure. In a report called “What makes a successful Fintech hub in the global Fintech race?”, CBInsights puts finding the right talent in first place. Good talent helps companies rise to the top. And once they get there, they are able to attract even better talent.
How to Avoid Hiring the Wrong Team:
Surviving in such a competitive industry requires in-depth initial planning and resource optimization. The majority of FinTech ventures have difficulty handling the processes on their own. That is why, successful companies work with experienced partners, who are able to help them in all stages of development.
What We Do
At True North, we help companies that are determined to change the status-quo of the FinTech industry. We partner with firms who are willing to innovate, grow and challenge the niche to go forward. We’ve helped companies like Hijro, Upgrade, Lending Club, Dianrong and many others in their journey to becoming market leaders.
How We Can Help You:
We can help bring your idea to the market by teaming up with your experts to find the most efficient way to get things done. We will take care of all stages of your project:
- Planning: During the first and most important stage, we will focus on competitive analysis and consider all the crucial characteristics of your product. We will help you get to know your product intimately and to think of the possible ways to maximize the value it provides to the market. This way, we will pave the way for a seamless market penetration that will ease the product adoption in its early stage. This will allow the infrastructure behind your product to have the power to completely outrank the existing competitors. That is why, when defining the strategy, we will focus heavily on technology selection and architecture review. This part of the process will guarantee that the project will be executed in the most efficient way, thus avoiding common pitfalls.
- Product: The go-to-market strategy is something that many FinTech companies underestimate. No matter how good your product or the technology behind it are, if you’re too late to the game you’ll be beat out by the competition. By optimizing your market penetration processes, you are presenting the result from your team’s long-term efforts, while at the same time informing people that your new product is able to satisfy their specific needs. Failure to deal with the acceleration process often results in missed opportunities. The experienced team at TrueNorth can place permanent or temporary members to your delivery team to help you deliver your product faster. Our industry knowledge, vast experience, and advanced methodologies are a guarantee for the successful acceleration stage of your project. We bring our industry knowledge, advanced technology, and experience to the table in recruiting the best possible team for you.
At True North, We Turn Ideas into State-of-the-Art FinTech Solutions
With years of experience, not only can we take care of the development and execution of your project, but also provide valuable know-how. Years spent helping FinTech companies reach new heights has been instrumental in refining our best practices for FinTech software development. This allows us to assess your specifications and advise you whether there are better, more cost-efficient strategies to achieve your vision. We do a deep dive into the strengths of your product and determine the best ways to improve its design and functionality. Whether it’s platform-specific or a cross-platform solution, we are here to back you on your road to success!