The world fintech market came up to $110.57 billion in 2020 and is expected to reach $698.48 by 2030 according to conservative estimates. More than 6-fold growth in 10 years is a great result to achieve! As fintech is showing its enormous possibilities more and more evidently, many people feel like starting their business in this area. Sounds ambitious, but not impossible! And this is the reason why we decided to focus this article on how to independently start your own fintech company and generate real profit.
Types of Fintech Companies
It would be reasonable to take a look at the main fintech market trends before you go down to business registration. Fintech is not a monolithic area: it comprises a multitude of different kinds of activities, with new directions constantly appearing.
How do you know your fintech company is successful? Well, look at the industry leaders to find out some criteria to look up to.
The main sectors of the fintech sphere are presented below.
Digital Payments
Digital payments are gaining more and more popularity in recent years. Many consumers use mobile payment apps and digital wallets to make purchases. Fintech companies are taking a lot of efforts to make digital payments more convenient and secure and expand them across the globe.
Personal Finances
Fintech companies are developing a number of instruments that help consumers manage their finances, including budgeting apps, investment platforms, and robo-advisors. These are often more accessible than traditional financial services, which simplifies making informed decisions with regard to their finances for consumers.
Institutional Investors
Institutional investors are the fintech companies that specialize in asset management by investing capital on behalf of their customers. Their services include buying and selling shares, securities, bonds, and mutual and investment funds. Such fintech companies are well-versed in market research and use state-of-the-industry technologies to predict the markets and assess behavioral patterns with the help of artificial intelligence.
Blockchain and Cryptocurrencies
Blockchain and cryptocurrency technologies are transforming the financial industry, offering more and more new opportunities for transparent and secure transactions. Fintech companies are developing a multitude of new apps for blockchain technologies and are working hard to improve the convenience and security of using cryptocurrencies.
RegTech
Fintech companies are developing solutions that will help financial institutions comply with regulatory requirements, such as anti-money-laundering (AML) and Know-Your-Customer (KYC) rules. These solutions are based on technologies that optimize compliance processes and reduce the risks of regulatory requirements violation.
InsurTech
Fintech companies are also active in the insurance industry by offering new products and tools that help consumers manage and acquire insurance policies. Such instruments may include:
- Online claims processing
- Customized insurance products
- Usage-based insurance (motor vehicles insurance).
This is not an exhaustive list of areas where fintech companies may carry out their activities. Here are some other sectors which may be of interest to you:
- Big data
- Agro fintech
- Data security
- Customization of services, etc.
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10 Major Fintech Trends in 2023
The latest industry trends will give you an idea of which area and sector may be the most suitable for you to start a company.
Online Payments Growth
This fintech trend will continue growing in 2023 as more and more consumers will use mobile payment applications and digital wallets to make purchases. The speed of contactless payments and QR code implementation is also expected to increase.
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Open Banking
According to Statista, open banking will be used by 63.8 million people in 2024, which is a five-fold increase as compared to 2020. Open banking is a fintech sector that covers controlled financial information exchange between different organizations. Accessible API allows third-party suppliers to get access to the customers’ financial data. Many fintech companies that offer budgeting, monitoring expenditures, crediting, and other services, use open banking features.
Further Integration of AI and Machine Learning
Fintech companies are actively using these two instruments to customize financial services, identify fraud, and automate processes. And these technologies are going to reach a new level in 2023! Chatbots, virtual assistants, and predictive analytics are expected to be used on a wider scale. The world artificial intelligence (AI) market in the fintech sector is anticipated to reach a jaw-dropping $26.67 billion in 2026, with the average annual growth pace of 23.17% remaining stable in the period from 2023 to 2026. In the meantime, more than 90% of international fintech companies heavily depend on AI and machine learning.
Neobanks
According to Statista, the number of people who have at least one account with a neobank will reach a peak of 39.1 million in 2025 as compared to 20 million in 2021. However, the number of neobanks and the range of services they provide show a tremendous upward increase as the demand still considerably surpasses the supply.
Payment Gateways
Over 55% of US customers pay with credit cards, and 52% more use debit cards. All these transactions require creating a payment gateway that ensures the transaction process between customers and retailers.
More Services with Integrated Finances
2023 is expected to be a year when integration of financial services into non-financial products and services will be gaining momentum much faster. More and more companies are expected to offer financial products and services (such as credits or insurance) as part of their activities.
More Extensive Use of Blockchain and Cryptocurrencies
According to analysts, the global blockchain market will grow an astounding 143-fold by 2030 and will reach a volume of $1.5 trillion. The major financial services, including Visa, MasterCard и PayPal, have started using cryptographic assets, making it possible for others to make cryptographic payments. Blockchain and technologies will be implemented at a faster rate in 2023 as an increasing number of financial institutions will offer these services and more and more enterprises will start accepting crypto payments.
Biometric Authentication
Analysts predict that companies that use passwords rather than biometric authentication procedures will lose customers, especially if access is given to money and other financial information. 81% of customers that need services in this area are actively looking for fintech companies that propose quick identity verification or authentication. According to Statista, the global biometric market will grow from $42.9 billion in 2022 to $68.6 billion in 2025.
Voice Payments
Statista says that the number of voice assistants available in the world will exceed the number of people by 8.4 billion by 2025. Fintech companies are actively integrating them into finances management, thus raising the security level. The essence of using voice assistance is in the fact that the user’s data is reliably protected by voice biometry. The owner can make purchases or check the balance with the help of a voice command and simultaneously perform any other actions.
Gamification
We are talking about the technologies aimed at customer service quality improvement. Companies use gamification to win customer loyalty and increase brand awareness, so the gamification market has been on an increase in the past 5 years. Statista notes that gamification expenses increased sharply from $4.91 billion in 2016 to reach the level of $11.94 in 2022.
These are just a few potential trends in the fintech sphere that may be realized in 2023. It is important to remember that the industry is constantly evolving and new developments may appear that are outside the focus of our attention now. When you choose an area for your fintech company, we recommend sticking to the niche where your expertise is the strongest. It should be noted that the competition in the new fintech sectors is always lower.
Want to know more about 10 innovative fintech business models? Welcome to our new material.
Main Stages of Fintech Company Establishment
Registration of a fintech company is a complicated process that depends on the jurisdiction, the current laws, as well as on the business needs and goals. You cannot manage on your own if you have no knowledge or experience. So if you make a decision to set up a fintech company, you’d better seek professional assistance from International Wealth experts.
The process of legal entity registration for fintech purposes has its peculiarities in the majority of cases. At the same time, there are features that are common with any business entities, and we are going to look at them below:
- Research and planning. There is no point in setting up a fintech company until you study the market, identify the customers’ needs and preferences, and make up a business plan. It will help you to better evaluate the fintech market, understand who your competitors are, and create a roadmap for company growth.
- Development of a popular product or service. This stage may include the recruitment of a team of developers, designers, and other specialists to create a product prototype. You may also need to raise funds to cover the development expenses at this stage.
- Fintech company registration. At this step, you will need to find a jurisdiction with suitable laws and develop a business structure that will meet the owner’s requirements in an optimal way.
- Obtaining required licenses and permits. Certain fintech areas need to be licensed on a mandatory basis – for example, you will need a license in the field of monetary services. The laws and rules depend on the jurisdiction where the fintech company is registered.
- Opening accounts for fintech companies. You will need to find a financial institution that will provide optimal services to your legal entity. If you want to make the right choice (as confirmed by our customers’ feedback), contact International Wealth experts for updated information.
- Team creation. As your fintech company is growing, you will need a team of talented professionals who will help you develop and promote the product. These may include developers, marketing specialists, customer support service representatives, and others.
- Safe financing. Fintech companies often need considerable amounts of funds to develop and scale their products. But where to raise them? Well, you can resort to venture capitalists or business angels, and also use crowdfunding platforms. In different countries, fintech companies may also be entitled to different subsidies and benefits.
These are just some of the main stages of a fintech company setup. Particular steps will depend on the needs of your business and the market where you are going to work.
What risks will you face opening a fintech company? Well, they do exist (like in any business), and we have a separate article on them for your convenience.
Registration of fintech companies and opening accounts for them requires special knowledge and experience, and you can contact International Wealth experts if you feel that the amount of work is overwhelming. Please get in touch with our consultants or write to us at info@offshore-pro.info. We will help you create a business structure that will be perfectly suited for your business.
