D: What’s so special about FinTech?
FTF: FinTech startups can face challenges that other startups do not. FinTech always relates back to money which can be a very important but personal issue for many people. Users do not want to risk losing it, so startups normally have only one chance to get it right. Building trust in a FinTech product is essential but can take time. Because it is so personal, people may be reticent to discuss what they are doing with their money, amongst friends and social networks. And in the B2B space competitive pressures can undermine sharing. This may limit the extent to which FinTech products can grow virally. Other potential challenges for FinTech startups could also include regulation, legislation, and making costs competitive at small scale.
D: And what’s going to fill that space?
FTF: It’s obvious to us that there is space for technological innovation and creativity. However we believe true innovation is more likely to come from outside the finance industry. Banks and financial institutions are just not the kind of environment where creativity flourishes. It may happen in coffee shops, or around someone’s table, but it all starts with an idea. But building this idea into a viable business is another matter. At some point FinTech requires industry knowledge and insight because if you understand exactly why the current business model persists as it does, you are more likely to find ways to successfully challenge or disrupt it. And finance is worth understanding as imagine disrupting the 74 trillion dollar global investment business, as just one example.
D: So it’s about finding creative solutions?
FTF: Exactly. Finance can be complicated but creative solutions can simplify this complexity. Varied and multi-generational users will only migrate to solutions that make it easy to accomplish what they want. Too much complexity will often discourage or delay usage. FinTech startups therefore need to keep the user experience as simple as possible. Good user experiences can also build trust and confidence, which again, is especially relevant for the financial sector. You are dealing with people’s money after all.