Which entrepreneurs expect to establish a Fintech startup?
Fintech is a combination of two themes that follow human history: finance and technology. Etymologically, finance derives from “fin” meaning “settlement” and technology from “techne” meaning “craft”.
Crafts used to be the wheel, carts, windmills, etc. that helped people. Fast forward a couple of centuries; fintechs use today’s craft—computers and the Internet—to help people and businesses in their many endeavors.
Today we are experiencing a digital transformation that dissolves boundaries, not only for people, but also for companies and industries. Fintech is a space where this transformation is more prominent, and many entrepreneurs and investors are drawn to it. Hundreds of fintech startups join the world stage every year. But what does it take to survive and thrive in fintech?
“A good fintech entrepreneur should not only have the idea, but should contextualize it by defining the problem and the solution in detail”
Characteristics of a good fintech entrepreneur
Famous entrepreneurs are often portrayed as big dreamers, relentless followers of their ambitions and people with intuition. Just catch that bright idea and follow your dream relentlessly. As exciting as it sounds, this romantic approach is not true.
Of course, an entrepreneur must have an innovative idea, but it can easily fall out of context without a well-established business plan.
A fintech business has four pillars: finance, technology, legal/compliance and sales operations. The start-up team must have all four corners covered, either with the entrepreneurial team’s own expertise or through their suppliers and partners.
A good fintech entrepreneur should not only have the idea, but he/she should also contextualize it by defining the problem and solution in detail. Then the idea should be encapsulated in a business case by considering how it should be built on the pillars by planning which business model to follow, which sources are needed to actualize and how and to whom to sell.
Setbacks that must be faced
To set up your “well-planned” fintech business, you need a legal advisor, an accountant and a bank account. This sounds pretty much like what any other business would require, but for fintechs, life is a little more difficult.
For example, a security account is the first thing required by regulators in all countries from all electronic money institutions. So you go to a traditional bank and apply for a security account. You will be asked for accounts for the last 3 years. But how can a newly established business fulfill such a request?
Opening a security account is just the first, easiest step. You will face other hurdles in money transfers, cash flow management, various legal and compliance issues, sales operations, etc.
To handle all these aspects, a fintech business is also expected to be agile. With the setbacks and legacy solutions blocking the way, you may find yourself rudderless in unknown territory.
The ultimate goal of a business is to make money. But if the game is built on rapid growth and value creation at the same time, but profitability is not at the forefront, it can be a big mistake to assume that profitability will follow growth, especially in a macroeconomic environment that we are in. In such cases, the game can change to a dodge ball. Only the one who released the ball before it exploded gets his share of joy.
Hence the need for a good business plan and regular reviews of it, the team and the vendors to take care of all the pillars of a fintech startup. Otherwise, it’s easy to become fragile while trying to be agile.
How would EMBank enter this journey?
European Merchant Bank is a fintech-friendly challenger bank with a good understanding of and experience in the fintech ecosystem. EMBank helps fintech institutions to obtain protection accounts for EMI, PI or PSP, but also the infrastructure to build the system on as long as the business is well established.
Apart from smoothing the necessary banking operations and providing the API-based platform ready for operation, EMBank offers something that legacy banks cannot, and many challenger banks do not: Act as a true partner with the motto “Digital Banking with a Human Touch”.
European Merchant Bank has vast experience unmatched in the fintech ecosystem. We have worked with fintech companies in different phases of their development, in different countries/regions, and offer a range of products and services.
We would like to hear your plans and work with a road map adapted to your needs.
