3 Unexpected Challenges Fintech Startups will Face
Fintech startups are popping up all over the place challenging the traditional banking model and changing the way we handle money. Technological advances have made it easier for more startups to join forces and create new and better ways to bank, handle payments, and invest.
With all the hype, though, there are certain challenges fintech startups will face.
- Earning Trust
There’s a general sense of unease when dealing with finances, even in the traditional sense. The risk of hacking and fraudulent transactions looms over everyone’s head. Now add in the technological aspect of fintech and people are even less trustworthy.
Fintech startups must come out of the gate with exceptional security practices in place to earn the trust of the general public. This includes things like two-factor authentication, biometric authentication, instant alerts, and data encryption.
Fintech startups need to win over the trust of consumers, taking them away from the big bank. It’s not an easy job, but many will be able to do it with the right strategies.
- Big Banks will Fight Bank
Big banks aren’t going to just stand there and lose their customers – they’ll try to join the fintech trend too. Because big banks already have the customer base, if they’re able to replicate or at least start something similar, they’ll keep their customer base, lessening the target audience fintech startups may have.
Fintech startups have distinct advantages over banks, though, especially those with an incredible technological background. Fintech startups have a greater ability to be flexible, adapting to what their audience needs, whereas big banks can only do much despite their size.
Fintech startups can also start a specific niche, whereas banks cater to the masses. Focusing on a niche could be what sets fintech startups apart from banks and gives them the upper hand.
- Staying Focused even as you Grow
Fintech startups will grow – there’s no doubt about it, especially as technology continually evolves. But growth can cause a loss of sense of customer service if you get too big. As you grow, it’s impossible to be nurturing with every customer.
Fortunately, the technology aspect makes it easier to deal with the masses, but don’t lose that personal touch. The minute consumers feel like ‘just a number’ they’ll move elsewhere. Using technology to your advantage to automate payments and appointment scheduling is great, but don’t lose that personal touch.
Fintech Startups Have Distinct Advantages
Fintech startups have many advantages. There are ways you can be a startup and yet be wildly successful despite the odds stacked against you. Big banks have their lion share of the industry, but slowly consumers are adapting the new ‘way of banking’ and trusting fintech startups as much as possible.
Taking as many steps as possible to earn the trust, offer products consumers need and be competitive with banks is the best way to be successful as a fintech startup in 2021. Do you have what it takes to win over the audience you want?