Over the last couple of years, the Fintech industry is growing exponentially along with its user base. The global fintech marketplace is a gargantuan digital scape. The market is estimated at $309.98 billion, with an annual growth rate of 24.8% through 2022. Considering the projections and increasing statistics, the Fintech world is most likely to be valued at around $191 billion by 2025. As compared to 2019, 2020 saw a 71% increase in user registrations. Large fintech companies saw a 20% increase in monthly average users.
Even with such exponentially increasing numbers, it’s easy for Fintech startups to disappear. According to statistics, about 90% of startups fail due to an improper market fit and incompetent partners/engagement with their customer base. This blog covers the possible cause of failure for your organization and ways you can avoid stepping on the wrong crumbles.
Fintech segments, including credit unions (69%) and banks (49%), firmly believe that partnerships in the Fintech world are worth pursuing/investing in. Along with that, here are some other reasons why you should think of Fintech as your next big investment.
- Abundance of APIs
- Rising Government Interest
- Changing Consumer Mindset
Major Reasons of Fintech business’ failure
As per the Wall Street Journal, 75% of venture-backed Fintech startups fail, leading to an altogether detailed analysis. Here, we mention some gleamingly obvious causes for a fintech startups’ failure:
1. Wrong timing:
It could take much time, from 3 months to a year, until the investor finally hands over the monies. You need to play it safe by planning at least six months to the actual juncture when you need the money. The failure of Fintech companies lies in the fact that investors wait for the right time to invest than splurge their capital on startups.
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2. Ignoring the set norm:
One of the solutions to save Fintech startup companies could comply with the rules and regulations set by US federal institutions. The US is an example of the guidelines for financial institutions and the consequences of delinquencies. Some of the largest economic organizations in the world have been subjected to heavy penalties for not complying with the set laws.
Fintech app developers ensure to use agreeable practices to achieve the business ends of the app. These involve respecting local/international data/privacy laws.
3. Not Understanding the money:
In most of the Fintech industry, the relationship between a customer and a business organization is straightforward. However, finance is a different game altogether. These are some of the sectors that directly impact fintech mobile app development. Hence, business owners must perceive the function of money either through scholarly work or by bringing on board the right advisors.
4. Wrong metrics to start with:
Often, Fintech startups fail because of unclear sources of their revenue models. Launching a high-tech built app with the right prices is not the way to build long-term trust. Brands with strong differentiators stand the best chance to beat their competition.
Read more about developing a Fintech business app here.
How to save your Fintech business from failing: Technology to the rescue
1. Minimize your sells:
Fintech software development shouldn’t be overloaded with unwanted stickers and unwanted pop-ups. Keeping things as minimal as possible in your apps is often the best approach. It would help if you modeled apps with intuitive functionalities that encourage users to complete their objectives.
2. Trust building:
Operations scale up automatically when you match the frequency of your customers and continue delivering customer service. However, a brand’s reputation is built over time, with a risk of being thrashed overnight. You need to market customer success stories as online audiences are attracted to user-generated content on social platforms.
Blockchain, artificial intelligence, augmented reality, and 5G are some of the most sought-after technologies disrupting the banking and finance industry. A prime example of the same approach is Ant Financial (formerly Alipay). What started as a single-offering payment portal is today a multi-billion dollar company leveling JP Morgan Chase and Goldman Sachs.
There are several things that the domain is doing right. Multiple challenges for financial startups are yet to bloom, but the willingness to be agile keeps them rising.
Some of the highest economy countries adopted this expansion of apps and whatever lessons from financial startups that other industries have gathered. In case you are looking for reliable fintech app development services, feel free to contact us here.