Software development for fintech: an ultimate guide for startups
If you are thinking of starting a fintech software development company, you are definitely on the right track. The global fintech market is expected to reach a value of nearly $400 million in the next five years. However, if you want to start selling custom fintech software development services to the wider market, you have to follow specific steps to get there.
How To Create A Fintech Software Development Company From Scratch
Software development for fintech is a lucrative field, which is why you will face stiff competition as a start-up. Fintech is a serious business – you are dealing with highly sensitive information, after all. Financial institutions may not be as keen as you think to hire a brand-new fintech software development agency that hasn’t proved its worth yet, so make sure that you are prepared to wow every prospect from the start. (And, on a more negative note, prepare for rejection, too!).
1. Study All The Relevant Role Players And Regulations
Fintech software development services are subject to regulatory guidelines and standards, and if they are not, your clients probably have internal and external compliance standards they must adhere to. In Europe, you’ll need an Electronic Money Institution (EMI) or Payment Institution (PI) license to operate if you want to work with major banks. These licenses come with strict capital requirements that can be quite hefty for a start-up. An EMI license allows you to work with electronic money transfers but requires at least €350,000. A PI license requires much less money in the bank – from as little as €20,000 all the way up to €125,000. Your available capital will therefore determine what kind of fintech solutions software development company you’ll operate.
As a start-up, it’s best to opt for small PI or EMI licenses that allow you to handle up to €3 million per month in turnover. Remember that legislation differs from country to country, so always do your due diligence.
2. Choose A Niche
What will you specialize in as a fintech software company? Online banking solutions, payments, money remittance, global payroll, or even consumer budgeting and investment apps are all viable possibilities, but you have to pick a niche and a target audience that works for you. Start by thinking of problems you can solve for customers. What are their pain points? Once you know what your niche is, you can develop a Unique Selling Proposition. Your solution has to disrupt the market in some way. Offering the same solution as a competitor at a cheaper rate is equally disruptive as inventing something new!
3. Identify The Right Partners
No fintech company is able to operate in a vacuum. You have to work with other industry players and integrate with existing solutions in order to succeed. You’ll also need a team of legal and business consultants to license your business and make sure that your software solution meets regulatory standards. Over time, you’ll need to connect to payment card issues, FX, banks, SWIFT, SEPA, and other partners. Every single one will have a set of requirements you’ll need to meet, so start the conversation early.
4. Get Your System Up And Running
Licensing and capital can take anywhere from 3 to 6 months. You’ll need to have a strategy to hit the ground running. Most fintech companies operate as a Software as a Service model. It’s much cheaper than on-premise solutions, and you can be up and running within weeks, not months. It’s also really easy to scale up as your customer base grows.
As a fledgling fintech software development company, the road ahead will not be easy, but it will be worthwhile. Persevere, do your homework and prepare well, and you are sure to succeed.
If you’re self-employed, you won’t be given a paystub like you would from an employer. Making use of a paystub creator can be done in various ways and the process doesn’t take long. You can take the help of platforms to create casing payroll checks.