Running a FinTech company can be an alluring venture, but it’s important to understand how to get started.
Here are the steps you can take to build a fintech business.
11 Steps to Launching a FinTech Business
1. Choose Your Type of FinTech Business
The first step in launching a fintech business is to identify the type of fintech business you want to launch. You might choose from the following types, among others:
- A digital bank or neobank
- A mobile payments company
- A peer-to-peer lending platform
- A cryptocurrency exchange
- An online investment manager
2. Name Your FinTech Business
Give your fintech business an identity so people will think of it as a well-known and respected brand. You can take the name of your fintech business from your industry, focus on a geographical location, or use your own name among other options.
The main goal for naming your fintech business is to make it sound appealing and trustworthy so that people will be comfortable trusting it with their money.
3. Determine Your FinTech Business Model
There are several possible types of business models for a fintech business including:
- Selling products or services to consumers
- Selling products or services to other businesses
- Making money from transaction fees
- Earning interest on customer deposits
No matter which model you choose, make sure that it aligns with your business goals and the products and services you offer.
Read more about choosing the right business model for your fintech business.
4. Choose a Legal Form for Your Business
By incorporating your fintech business, you will limit your liability. You can incorporate as a Limited Liability Company (LLC), a C Corporation (C-Corp), or an S Corporation (S-Corp). Or you can operate as a sole proprietorship.
The business structure you choose for your fintech business will determine the amount of taxes you pay and which state or federal tax forms you need to file.
Read our article comparing the most common fintech business structures.
5. Find FinTech Business Partners and Suppliers
You’ll need to identify and partner with technology providers, financial institutions, and others who can help you launch and run your business. These business relationships will be critical to your success.
Some of the things you’ll need to consider when finding partners and suppliers include:
- What technology platforms will you use?
- Who will provide banking services?
- Who will hold customer deposits?
- Who will process payments?
6. Write a FinTech Business Plan
All fintech business owners should develop a business plan.
A business plan is a document that outlines the goals, strategies, and operations of a business. It can be used to secure funding from investors or lenders, as well as to guide the day-to-day operations of the business. The business plan should include information on the company’s products or services, market analysis, financial projections, and management team among other things.
Read our article about how to write a fintech business plan.
7. Apply for the Necessary Permits and Licenses
There may be required licenses and permits you need to obtain before launching your fintech business.
For example, if you plan to offer banking services, you’ll need to obtain a state banking charter. And if you want to launch a cryptocurrency exchange, you may need a money transmitter license.
Contact your local Small Business Administration (SBA) office or Chamber of Commerce to learn more about the permits and licenses required in your area.
You must also register your fintech business as a legal entity with the state where you plan to do business. You can simply file an online form through your Secretary of State’s website.
Registering with the federal government is also essential so you can properly pay taxes for your business. You will also need an Employer Identification Number (EIN), which you can apply for at the IRS website if you plan to hire employees.
8. Determine Your Budget & Apply for Funding as Needed
In developing your fintech business plan, you will figure out how much funding you need to start and grow your business.
If you have your own funds to invest in your fintech business, you may consider taking advantage of that. In addition to your personal funds, other forms of potential funding for your fintech business include traditional bank loans, SBA loans, credit cards, angel investors and family and friends.
Read our article about the costs associated with starting a fintech business to help you determine if funding is needed.
9. Get the Technology & Software Needed to Run Your Business Efficiently
When you start your fintech business, it’s essential to have the right technology in place to maximize efficiency. You definitely need a computer with Internet access and accounting software for tracking expenses and revenues.
You may also want to invest in project management software, customer relationship management (CRM) software, and web-based financial software such as a personal finance manager or budgeting tool.
Read our article about the technology and software you need to run a fintech business.
10. Market Your Fintech Business to Potential Clients
Before you start selling your products and services, you have to let the world know you exist. The first step is to create a website so people can learn more about your products and services and how they benefit them.
After you launch your website, start promoting it through social media channels like Facebook, LinkedIn and Twitter. Also consider networking with other people in the fintech industry through social media and blogs so they can help share your business.
You also need to start gathering the materials needed to execute on your promotions strategy, which is your strategy for attracting new customers. FinTech businesses should consider the following promotional strategies for which you should start getting prepared:
- Sponsoring events and making donations in the fintech space
- Listing on popular fintech directories
- Creating interesting and engaging blog content about fintech topics
- Distributing thought leadership papers and whitepapers about fintech trends
- Hosting webinars or podcasts on relevant topics
- Developing partnerships with other businesses in the space
- Offering free trials or discounts to customers to try out products/services
- Creating social media contests and giveaways
- Creating an email newsletter with fintech tips, tricks and trends
- Speaking at relevant conferences or meetups
Read our article about how to market your fintech business for more tips.
11. Get New Clients & Grow Your Business
When you promote your products and services, you’ll start to get interest from potential clients.
Make sure you’re ready to serve these clients. Also, be sure to establish systems to ensure consistency and reduce costs. And be sure to find and train the right people to help you grow your fintech business.
Read our article about how to effectively grow your fintech business to learn more.
Starting a FinTech Business FAQs
There are many reasons to start a fintech business. The industry is growing rapidly and there is a lot of potential for businesses that can provide innovative products and services that solve problems for consumers and businesses.
To start a successful fintech business, you need to have a good idea, the right team in place, and a solid business plan. You also need to choose the right legal structure, get the necessary permits and licenses, and find the right funding.
Here are some tips for starting a fintech business:
- Do Your Research
- Find the Right Team
- Create a Business Plan
- Choose the Right Legal Structure
- Get the Necessary Permits and Licenses
- Find the Right Funding
- Get the Technology & Software You Need
- Market Your Business
- Get New Clients & Grow Your Business
- Stay Up to Date on Industry Trends
A simple checklist to use when starting a fintech business is as follows:
- Choose Your Type of FinTech Firm: This should be based on what you are best at and how much experience you have. Remember to keep your interests, skills, and experience in mind at all times.
- Name Your FinTech Business: This should be done with care, as your brand is important for attracting the right customers. A simple, memorable name will go a long way.
- Choose a Legal Form for Your Business: Whether you choose to become a sole proprietorship, partnership, LLC, corporation or another option will depend on your business. Ensure that you are aware of all the implications of each type.
- Determine Your FinTech Business Model: Determine how your business will make money. Will you sell products, services, or a combination of both?
- Write a FinTech Business Plan: Your business plan will also help you determine what your start-up costs will be and will provide a roadmap with which you can launch and grow.
- Apply for the Necessary Permits and Licenses: In most locations, you will be required to apply for a business license and/or permits before you can begin operations.
- Determine Your Budget & Apply for Funding as Needed: You will need to know how much money you have to spend on all of your business-related expenses before opening any doors. If needed, apply for a small business loan or other funding options.
- Get the Technology & Software Needed to Run Your Business Efficiently: You need to have the right tools in place to succeed. Implement software that will help you manage your time, contacts, and business operations in general.
- Market Your FinTech Business to Potential Clients: A solid marketing plan will be crucial to your success. It should focus on attracting the right customers so that you can provide them with the products and services they truly need.
- Get Clients & Grow Your Business: Once you have a solid marketing plan, it's time to actively pursue and secure those who could benefit the most from your products and services.
Starting a fintech company is definitely possible, and there are many things you can do to increase your chances of success. With all of the things that we outlined in mind, you should be well on your way to starting a successful fintech company.