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How To Identify A Viable FinTech Startup Idea

Not all FinTech startup ideas are created equal. Some will become absolute hits when founders make them come alive. But a vast majority of them won’t get past the ideation stage. Only a few will survive as ventures for more than a few years.

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If you’re thinking about building your own FinTech startup, you’ll want it to succeed in the long term. Here are some ways you can spot an idea for a Fintech startup that’ll do well in its niche.

Find Out What The Market Needs

Your venture has to solve at least one problem in finance and must do so by leveraging contemporary technologies. That problem has to be widespread enough to generate a sizeable customer base for your startup when you eventually launch it.

Even if you happen upon a solution without examining the market for it, you’ll have to find out what your potential customers think about it. They are the ones who will be purchasing your product when you put it out. The likelihood that your startup will succeed will depend on the market’s opinion of it.

Ascertain How Much Competition There Is

If there are a lot of businesses in a given industry, it’s probably a sign that they’re serving a large market. But don’t base your decision to build a startup in that space solely on this. You need to be sure that the market isn’t oversaturated with potential competitors. If it is, your startup may struggle to survive in it.

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On the other hand, if just a few businesses are operating in the niche you choose, your startup could thrive there. However, it’s possible that they’re selling to a small market—in which case your idea is probably not viable. Again, you’ll have to investigate the state of the market to discover what’s really going on there.

Determine How Much Relevant Talent There Is

You’ve found an exciting FinTech startup idea. It ticks all the right boxes for market size, demand, and profitability. You can’t wait to take it from the ideation phase to a working venture. But maybe you’re overlooking something—the skills you’ll need to make it do well.

You could have a brilliant idea and yet struggle to find the right talent to build and sustain it. If you can’t discover enough skilled persons to staff your startup, you may wind up spending a lot of money improvising or hiring remote workers from other places. And this could eat into your profit margins.

Use Ideas From Elsewhere In The World

You don’t have to reinvent the wheel with your FinTech startup idea. Why not examine ventures that have worked in other countries, and try to replicate them locally? Of course, you may have to adapt their products and operations to suit the realities of your region. Still, it’s much easier than trying to fashion a totally unique startup.

Consider Ideas That Attract The Most Funding

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FinTech startups tend to receive more investor funding than other startup types. But even within Fintech, there are significant differences between the amounts of funding that goes to its various niches.

The amounts of financing that startups in an industry attract can be a fairly good approximation for the opportunities that exist within them. Investors who pour funds into these spaces are aware of this. You could follow this rule to learn where the openings for growth are, and launch your startup there.

Look For Sustainable Business Models

Even when you find a business idea attractive, you still have to think about how it’s going to make money. You will need to come up with possible business models, and test them to determine how viable they are.

Final Words

The successes that FinTechs have achieved in the past few years have caused many entrepreneurs to get involved in the industry. But not all of them will strike gold. If you’re considering launching a FinTech startup, you should thoroughly examine your startup idea before setting out with it. The tips we’ve shared here should help you do that.

Featured Image Source: TechBullion

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Ikenna Nwachukwu holds a bachelor's degree in Economics from the University of Nigeria, Nsukka. He loves to look at the world through multiple lenses- economic, political, religious and philosophical- and to write about what he observes in a witty, yet reflective style.

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