How fintechs can avoid a spiral of death in the age of COVID-19

On average it takes at least 2 to 3 years for a fintech company to transition from an initial proposition to being market ready, often at the cost of millions of pounds. In the current COVID environment, where it’s more difficult to develop products and prove profitability to investors, many industry commentators are warning of a ‘fintech spiral of death’. This is where complicated market developments and a lack of access to funds combine to end a growing financial service businesses’ development cycle before it even begins.

But this doesn’t have to be the case. We now live in an age where a plethora of fintechs exist to make growing an early stage business easier, quicker and more cost effective. The real issue now is connecting a new business with the ecosystem of partners required to make growing their operations, and getting to market, hassle free. 

The regulation distraction 

Perhaps one of the most daunting aspects of creating a new fintech business is ensuring that operations and products meet all legal and regulatory requirements. Growing fintechs often get bogged down with regulatory concerns due to the complexities surrounding the matter. Access to the right regulatory technologies can also prove cumbersome to implement and expensive.

Failing to take out the right cover however, and ensuring a business is fully compliant, can present major hindrances for new fintechs, and have knock-on effects when it comes to growing revenue or attracting and raising capital to grow and expand from investors. Progressing a business without the right regulatory compliance in place can lead to significant delays in getting to market, or in worst case scenarios, such as what we saw recently with Robinhood, put an end to a businesses launch completely. 

Access to emerging technologies

Sitting alongside regulatory concerns there is also the issue of access to emerging technologies such as those that streamline payments and banking. Investing in such technology infrastructure is not just by nature technical, but also extremely costly and time consuming. Many early stage businesses, consisting of just a few people that might not be experienced in the world of technology, are unable to access these technologies to help them grow and get to market. 

Whereas previously, early stage entrepreneurs would often operate from bricks and mortar outlets and rely on physical transactions and customer interactions, in today’s increasingly digitally driven world, investment in the right technologies has become vitally important to succeed and grow. This includes investing in technologies that can help speed up customer onboarding, those that enable access to secure payments and multi currency accounts and much much more. 

 A one stop shop for fintechs

Fortunately, help is to hand and we are now seeing a new proposition enter the market, where established fintechs work closely with partners to create a one stop shop for new businesses.

New businesses now have access to a secure, cost-effective premium ecosystem of more established organisations that can guide them through the complexity of their specific sector, supporting the technologies that can help with processes such as compliance, licensing, payments infrastructure and more. 

Not only do these organisations provide emerging fintech businesses with a tech-layer to build the business logic on top of, but they also remove the time and investment needed to build and maintain complex back-end systems. This means fintechs can save valuable time and money and shift focus towards what really matters - building and perfecting their projects and enabling them to get market ready.