Niche fintech services for businesses

Solutions for creators. Business credit card. Customized loans. Technological banking services for businesses have been a flood in recent years. In the wake of a global pandemic, everyone can get a solution adapted to their needs – thanks to niche fintechs. Now, with everything digital and increasingly automated, this transition is evident.

Companies saw the battered banking establishment as ripe for disruption and took advantage of the opening by creating niche products. But it was more than just a desire to adapt to a changing reality that drove companies to go niche – banks weren’t changing fast enough to keep up with new consumer needs.

The traditional way of thinking was broken

As a large bank, you have to play a game of scale. They learned it in business school books, but it should be learned from. Banks are capturing huge market segments to cover their high development costs, targeting segments based on wealth and the mass market. Big players go after big players. Reputation, legacy and trust always guided the way traditional banks operated, and the thought of competition was not even allowed. The technology they used was proprietary and primarily analog.

With the financial crisis of 2007-08 and the resulting bank bailouts and regulatory changes, everything began to change and a new ecosystem developed. Blockchain technology, combined with the ever-increasing number of mobile phones with internet access, has provided the perfect place for fintech ventures to thrive.

Niche fintech is the new disruptor

Stuffed with venture capital funding, thousands of fintechs emerged, all competing to fill the void left by banks in payments and lending. Despite PayPal’s success as a payment processor in 2018, other fintech companies found it difficult to compete with traditional banking because they lacked the underlying banking infrastructure.

Nevertheless, the pandemic took its toll. Online business and e-commerce are growing rapidly, external services and digital are the new normal – companies have been hunting for underserved customers. The new reality has led to interest in investing in B2B fintech, as businesses demand flexible solutions for their specific needs.

New fintech startups have begun to target the business world. Their knowledge and infrastructure from the consumer world allowed them to meet the more complex needs of businesses. Unlike the “one size fits all” approach of the past, these new startups started tailoring solutions to specific markets, moving to Fintech-as-a-Service (FaaS).

And they are still growing as digital technologies continue to reshape payment, administration, credit, insurance and other financing methods. Niche services’ ability to adapt to specific sectors makes them highly desirable. According to IndustryARC, FaaS services will reach $161 billion worldwide by 2026.

Understand customers’ needs and problems

Fintech startups broke into banking and carved out various niches: credit card refinancing, small business loans, B2B payments and more. Big banks became the Walmart of financial offerings, while fintech platforms became specialty eco-stores. So why is that?

Niche fintech companies focus on customer centricity and simplicity, as well as the freedom to build solutions without the burden of legacy systems. Their sophisticated data collection and analysis also enables these companies to develop better solutions. Niche services gain a thorough understanding of business needs and identify their problems. The teams go through physical receipts before entering data into Excel and waiting for refunds. Advertisers need many cards to scale campaigns. Business owners want to know exactly where their money is going – and niche fintech services make that possible. If you know your customers, you can meet their needs and be successful. And it’s huge.

Traditional banks are trying to acquire third-party technology. Although they have the resources for in-house development, they cannot match the speed of fintech startups. Niche fintech is developing rapidly, and customer experience (CX) is at the heart. It focuses on a single centralized technology stack, so there is more room to prioritize the customer experience while reducing the need to invest in backend infrastructure.

What are their niches?

Today’s fintech services take place in many niches. In recent years, the investments have hunted corporate industry, payments and digital lending. Wealth management has also seen some changes. The bottom line is that today’s niche fintech services target specific industries such as marketing or e-commerce, as the use of digital payment methods drives them. Stacking funds is essential, and you also need to allocate your funds wisely in other key spending areas such as accounting, development and advertising. Fully integrated software is what these markets demand.

Some industries are looking for flexible consumption solutions because their growth is skyrocketing. Affiliate marketing and e-commerce is one of them. The bank account is not enough. They need a lot of cards to control spending before it happens and get more seamless team management. And today’s solutions can cover all of this. For example, Karta serves these markets with great advantages: companies can create cards for all use cases, set limits, share expenses by team or project, link cards to a specific supplier, track expenses in real time and much more. It is designed to stop the manual load and restart financial management in “simple mode”.

New niches in the fintech industry

The market for fintech solutions is snowballing. Fintech offerings for SMEs may be in the spotlight, but large multinationals are benefiting from these solutions. The pandemic has accelerated digital transformation in companies. However, it takes time for these changes to occur, especially when a company is large and rooted in traditional business models. Nevertheless, multi-currency flexibility has the potential to save such companies significant sums.

E-commerce is still an avenue to explore as well. In recent years there has been an increase in direct to consumer, a game changer that elevates distribution and customer service. It’s only a matter of time before others catch on. According to eMarketer, ‘US digital D2C sales are expected to reach USD 175 billion by 2023’. These companies benefit from intimate customer relationships because they have access to and full control over user data.

By using digital channels, they deliver a better customer experience that scales. And niche fintech companies tackling high bank fees and complex financing can make a big deal. These services offer many features, including a way to segment teams and their expenses and link cards to vendors to control expenses and advertise at scale. Niche fintech and direct-to-consumer approach are a perfect fit, making corporate spending seamless.

The future of fintech is niche

The future is now. In some areas, the big banks still rule. They will focus on the super rich while the rest find their niche. Opportunities for innovation are widespread throughout the financial sector. New players can gain direct access to companies. They can innovate at a pace and scale that is impossible for larger lenders. And this is just the beginning.

There is still plenty of room to grow, as many businesses have yet to adopt niche solutions. A host of services are already implementing cryptocurrency and blockchain technology into their offerings, paving the way for more innovative financial solutions.

What is tomorrow’s niche fintech? We wish we knew so we could all make gains in the stock market. But we can guess anyway: it’s deeply personalized and omnichannel, more ‘tech’ than ‘nice’. This means that artificial intelligence, data science, cloud computing and APIs will no longer be luxuries, but necessities. And now the industry realizes that this is a full marathon, not a sprint.

About Nik Zimarkov

Nik is the CEO of Karta.io, a collaborative economy software. Nik has extensive international experience in the fintech market. In 2013, he started SWIPE (app) as a co-founder. Nik was the owner of one of Europe’s leading performance marketing agencies, OffersHub. While at an advertising agency, Nik encountered automation problems in the financial sector. He was looking for simplicity, so that companies could focus on growth instead. In January 2021, Nik Zimarkov launched Karta.io as CEO. Nik is a venture capital investor and crypto expert. Areas of interest: financial technology, digital currencies, apps.

About Karta.io

Karta is a simplified expense solution, all-in-one control center for secure delegation with expense transparency based on the company’s rules for employees, teams and projects. It changes the business mindset from complex manual workflow to a seamless automated experience, fundamentally changing the way companies manage their funds. We create financial solutions for companies and help them implement technology in their workflow.