Fintech is a fast-growing industry that touches almost every other corner of the business world. And yet, as a tech entrepreneur, your business faces unique risks that other business owners don’t necessarily need to worry about.
In a world of cybercrime, data breaches, and stiff competition, how can you keep you and your customers safe? In this article, we take a look at 4 prominent threats and talk about what you can do to keep a Fintech company safe from them.
1. Supersaturation
Tech is one of the fastest growing, but also most competitive industries on the planet. Even during rocky economic times, tech companies grow at a rate of around 20-30% annually— a figure that exceeds the average for other businesses during the best of economic times.
Tech companies that aren’t able to grow at this impressive rate usually fail. While there is no way to guarantee growth, there are steps you can take to make your company lean and competitive.
• Invest In The Right Technology: You would be surprised by how many tech companies are using an outdated tech stack to handle their own operational support. You know the saying about the carpenter having the shabbiest house on the block, right? It is the same principle. There are no excuses for skimping on the tech stack. Get good tools that will help you stay swift and competitive.
• Customer Service: In a super-saturated marketplace, customer service is the key brand differentiator amongst customers. They want to be treated well and are often willing to pay a little more to make that happen. Keep in hand that while you know what makes your product features a little different from the other Fintech company’s product down the street, your average customer won’t be nearly so industry savvy. It is the experiential things that will win them over.
• Branding Is Key: A good branding effort tells your customers a compelling story. It is the story of who you are as a company, sure, but by extension, it is also the story of who the customer is for deciding to do business with you. What motivates your business? Is there an issue near and dear to your heart? You don’t necessarily have to be the proverbial “coffee shop with a cause,” but you should be able to neatly convey your objectives and motivations in a way that will appeal to your customers.
These are, of course, considerations that are important in any business. However, in the highly competitive world of tech, they are the literal difference between success and failure.
2. Scalability
Remember those growth figures we described in the last section? Well, let’s say you hit them. Great news, right? Except that now you have a new problem. Your customer service is starting to lag. Your product support has gotten sloppy, and your customer success outreach is non-existent.
What happened? You got too big for your britches!
One year ago you were a startup with a skeleton crew. Not literally operating out of a garage, though if you had been, it is not as though there would have been too many people. Now you have the same crew, but ten times the number of customers. How do you support them all?
You have two choices. One, you can expand your team endlessly, hiring new employees by the dozen to keep up with the growing demand. You will need a skyscraper’s worth of people just to handle billing by year five, but at least you are growing, right?
But then there is option two: scalability-driven software. Find tools that allow you to seamlessly take on new customers without negating all of your profits with personnel and acquisition costs.
Of course, you will still need to make new hires now and then, but it will be at a much more sustainable level. When you do expand your team, it will be strategically based— not some desperate scavenger hunt for any available personnel.
A side note— tech is often associated with layoffs. Replacing human labor with machines to save money. It would be disingenuous to say that that never happens, but it is also not usually the goal. Tech at its best gives existing employees the opportunity to use their time more productively by automating dull tasks.
As a Fintech entrepreneur, that is a concept that shouldn’t be too difficult to understand. Many people thought that the very tech you are selling would put accountants out of a job. It didn’t.
3. Cybersecurity
Tech companies are particularly liable when it comes to managing cybersecurity concerns. As a business that handles finance, this is particularly relevant to you.
On the one hand, you will be handling your customer’s personal information, in the form of billing data. On the other hand, you are also providing a product that may collect highly sensitive information as well. You need to make sure that information on all sides of the equation is being kept safe.
4. Compliance
Finally, you also just need to make sure on the front end that your business is able to adhere to regulatory compliance. Financial software is beholden to a very specific set of guidelines. If you try to launch your product before checking all of the legal boxes, it could result in delays, and quite a bit of bad publicity.
There are also operational guidelines that you will need to deal with. For example, as a tech company, you will most likely participate in the subscription economy. Are you prepared to properly record revenue in compliance with ASC 606 guidelines? If you don’t know what that means yet, you are in for a not-so-fun surprise. Don’t worry. You will get it figured out.
Regulatory compliance doesn’t need to be a huge headache but it does warrant strong consideration on the front end. You want to get all of your ducks in a row before your business makes any public-facing moves.
Keep in mind that compliance isn’t just about keeping the government happy with your fintech business. It is also about maintaining your reputation. The court of public opinion is often more punishing than any regulatory body.
