This blog is for those startups who are looking for different ways to make their FinTech startup ideas live. Herein, we’ve curated top three reasons why you should start with your FinTech startup idea today. Let’s have a look!
You may have heard the new term “FinTech”, but what actually it is? And, why it is important for all the startups and entrepreneurs to know and understand about it? Let’s check more about it.
Over the past ten years, the advancement of mobile and computer technology have drastically changed the way entrepreneurs think about solving problems, plus the way consumers think about the accessibility. The daily transactions are more frequently occurring online via mobile applications. The Financial Technology is one of the most critical categories to have come out in this movement, and it is known as FinTech. “FinTech” stands for Financial Technologies. It is a new financial industry, which applies technology to improve financial activities. It is the new technology, which aims to compete with traditional financial methods when it comes to delivering financial services.
One of the most important things about FinTech is that the term “FinTech” is not just a buzzword. This is due to the fact that –
1. Investment in FinTech around the world has been increased dramatically.
Talking about the Global investment in financial-technology (Fintech), it tripled from $40.5 billion in 2013 to $12.2 billion in 2014, according to the report by Accenture. However, Europe was the fastest growing region in the world.
And, it is likely to increase in the near future as well. However, FinTech is not just about the financial service sectors, but about every business model that deals with the financial services industry. From filing taxes to even paying for coffee, everything has evolved with consumer technology.
2. The FinTech innovation has already matured.
According to the report, “$28 billion has been funded into 3,609 rounds for US-based Seed, early and late stage FinTech related startups since January 2008. In addition to this, $7 billion out of that $28 billion, has been invested since January 2017.
Now, you might be thinking that – who raised the money? The answer is FinTech startups, including tech companies with the products in the payments, personal finance, tax, insurance, banking, lending and credit categories.
3. Global Investment in FinTech
As you can see a constant increment in the global investment into FinTech sector, led by Venture Capital, Private Equity and Angel Investors in the below image.
Image Source: bnymellon
4. The Well-Known FinTech Funding Rounds from 2008-2017:
According to the above image, you can see the known funding rounds from 2008-2017. Seed, Series A, and Series B rounds accounted for 90% of the total rounds. The number of deals and dollars directed toward Seed and early-stage companies increased 506% from 2009 to 2015. In 2017, FinTech related early-stage and seed startups secured $2.38 billion dollars over 407 rounds.
Bottom Line: In a nutshell, we can say that the total number of deals and total dollars for Seed and early-stage startups were high, and it was peaked at $7.7 million in the year 2017.
With the advancement of mobile banking, the whole world seems to be moving towards faster payments. As this happens, a lot of FinTech companies provide solutions in the category of mobile banking.
Undeniably, the way people are earning and spending has completely changed. Thanks to mobile banking. It is also expected that there are a lot of growth opportunities in the mobile banking apps in the near future.
There’s a Berlin-based N26 FinTech company, which enables users to manage their bank accounts through their smartphones. According to the recent report, “The FinTech company, N26 has raised $60 million in a Series C round led by China-based Tencent Holdings and Allianz X”.
Founded in 2013, N26 has the total funding amount of $212.8M with the goal to solve the inadequacies of banking in Europe with its free MasterCard debit cards, free checking accounts, and millennial-focused mobile-centric user experience. Moreover, N26 has acquired more than 850,000 customers and it aims to reach 5 million app users by the end of 2020.
In general, the growth in FinTech is making the whole process more transparent, efficient and less costly. Mobile banking is one of the most valued categories. And, the mobile banking platform is the prominent sector which has a growth area for FinTech startups, undoubtedly. Therefore, if you have ever thought of developing mobile app under the category “mobile banking”, then it has a wider growth area.
The next category is investment technology that can be a good starting point for startups who want to transform their FinTech startup idea into reality.
One of the FinTech startup companies, Ellevest is a federally registered investment advisor, which offers a digital investment platform for women with the practical and goals-based approach. With the Ellevest app, users get investment plans, which are based on personal and real-life financial goals like starting a business, purchasing a home and tips on retiring well. Investment technology is another category among the most valued FinTech companies.
So, if your startup idea is falling under the category of investment technology, then it is safe to say that the investment technology is expected to remain hot in the future, too.
Innovation is occurring at a rapid rate. When it comes to the focused areas in FinTech, then the lending and payments are two key areas in which startups can start with. This is because that these two areas are growing at a faster pace more than ever before. As you can see in the below image, half of FinTech unicorns or semi-unicorns are focused on Lending and Payments categories.
Image Source: disruptivefinance
The innovation of FinTech has changed nearly every single prospect of the lending process, which makes the whole process simple. FinTech companies have transformed the face of the traditional model of lending. Moreover, they have replaced this process with peer-to-peer lending and also take care of safety in the whole process.
Not surprisingly, the payments sector is the fastest growing in terms of innovation and adoption. It is one of the most valued FinTech startups.
In short, FinTech companies have revolutionized in corporate and consumer online payments, too. Thus, we can say that there’s a lot for startups who are looking to transform their ideas into reality. As these two sectors – lending and payments can be your focused areas before making your startup idea live.
After notable transformation because of FinTech companies, startups can’t neglect to make their startup ideas live. Today, FinTech is responsible to revolutionize the different areas like investment, lending and payments.
As we’ve discussed top three reasons, and mentioned the focused areas in which startups can make most of their FinTech startup ideas. Here, one thing is clear: Fintech will radically redefine the payments, mobile banking, and it has potential to leave banks behind.
It also seems that FinTech will become the bigger part of the payments in the next few years. Being a startup, if you want to initiate your FinTech idea, then it is high time to start with.
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