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What do you do if you want to excel in financial modeling for the Financial Technology sector?

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Financial modeling is a vital skill for anyone who wants to work in the Financial Technology (FinTech) sector, where innovation and disruption are constantly changing the landscape. FinTech refers to the use of technology to deliver financial services and products, such as online banking, mobile payments, peer-to-peer lending, robo-advisors, and blockchain. To excel in financial modeling for the FinTech sector, you need to master the following aspects:

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1 Know your industry

The first step to excel in financial modeling for the FinTech sector is to understand the industry you are modeling for. FinTech is a broad and diverse field, with different segments, business models, regulations, and competitors. You need to research the market size, growth, trends, drivers, challenges, and opportunities for the specific FinTech segment you are interested in, such as payments, lending, wealth management, insurance, or capital markets. You also need to identify the key players, customers, suppliers, and stakeholders in the industry, and how they interact and create value.

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Narahari Adhikari

FCA (ICAI) ll CA(ICAN) ll Bookkeeping & Accounting Professional
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Keep it easy and simple- Understand the industry and your business, understand your business variables, identify cost and revenue multipliers, develop a model structure, work on the data, have a test run ! Do not try to make complex model, rather expand your assumptions and make it simple. Do not forget to seek guidance from industry experts.

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Paul Erdal

Chief Executive Officer | Founder at Payment System Consultants
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Stay up-to-date on the latest Fintech trends, business models, and regulations. Understand the specific challenges and opportunities within different Fintech sub-sectors (e.g., payments, lending, wealth management).

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David Lee

Director
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you need to line up your comparables and business segment with similar companies. list of competitors is the first basic step and then doing a comparison is the next one. after that you need to get financial information from market data and then get valuation multiples

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2 Build your assumptions

The second step to excel in financial modeling for the FinTech sector is to build your assumptions based on your industry knowledge and data. Assumptions are the inputs that drive your financial model, such as revenue drivers, cost drivers, growth rates, margins, capital expenditures, and working capital. You need to source reliable and relevant data from various sources, such as industry reports, company filings, market research, surveys, and benchmarks. You also need to validate and justify your assumptions with logic, evidence, and sensitivity analysis.

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David Lee

Director
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assumptions will come from market data and market fit that you need to perform as part of your own business planning and strategy. getting a simple p/l statement together will help and then getting a sample three statement model off of the web would be the next step.

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3 Design your structure

The third step to excel in financial modeling for the FinTech sector is to design your structure based on your objectives and audience. Structure refers to the layout, format, and organization of your financial model, such as the worksheets, sections, headings, formulas, and charts. You need to design your structure to be clear, consistent, and comprehensive, so that your financial model can communicate your story and answer your questions. You also need to design your structure to be flexible, scalable, and robust, so that your financial model can accommodate changes and scenarios.

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David Lee

Director
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You want to follow standard line items-- and then specify as you spend money and project budgets and forecasts. Usually you will have some unique nuance and you need to contextualize it through notes and records.

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4 Develop your calculations

The fourth step to excel in financial modeling for the FinTech sector is to develop your calculations based on your structure and assumptions. Calculations refer to the mathematical and logical operations that generate your financial outputs, such as the income statement, balance sheet, cash flow statement, valuation, and ratios. You need to develop your calculations to be accurate, efficient, and transparent, so that your financial model can produce reliable and meaningful results. You also need to develop your calculations to be modular, dynamic, and traceable, so that your financial model can be easily updated and audited.

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David Lee

Director
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Assumptions need to be realistic. Accuracy is a function of updating the financial model and gathering the information on the finance side. It is best to get accountants involved as soon as possible, as this information needs to be recorded from the begining-- otherwise this will cause confusion and possible questions during fund raising.

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5 Visualize your outputs

The fifth step to excel in financial modeling for the FinTech sector is to visualize your outputs based on your calculations and objectives. Visualization refers to the presentation and interpretation of your financial outputs, such as the tables, graphs, dashboards, and reports. You need to visualize your outputs to be concise, relevant, and impactful, so that your financial model can highlight your key findings and insights. You also need to visualize your outputs to be attractive, interactive, and engaging, so that your financial model can capture your audience's attention and interest.

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David Lee

Director
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Financial models should be used internally and then made into a presentation for easier understanding to external parties. what is important isn't the volume of information, but what information is important and how to build a narrative around this when explaining and understanding the status of the company.

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6 Test your model

The sixth and final step to excel in financial modeling for the FinTech sector is to test your model based on your standards and expectations. Testing refers to the verification and validation of your financial model, such as the error checking, quality control, and scenario analysis. You need to test your model to be error-free, consistent, and realistic, so that your financial model can perform as intended and expected. You also need to test your model to be adaptable, responsive, and resilient, so that your financial model can handle uncertainties and risks.

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Paul Erdal

Chief Executive Officer | Founder at Payment System Consultants
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Clearly document your financial models, including assumptions, methodologies, and calculations. Ensure your models are easy to understand for both technical and non-technical audiences.

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7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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What do you do if you want to excel in financial modeling for the Financial Technology sector?

1

2

3

4

5

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7

1 Know your industry

2 Build your assumptions

3 Design your structure

4 Develop your calculations

5 Visualize your outputs

6 Test your model

7 Here’s what else to consider

Financial Technology

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What do you do if you want to excel in financial modeling for the Financial Technology sector?

1

2

3

4

5

6

7

1 Know your industry

2 Build your assumptions

3 Design your structure

4 Develop your calculations

5 Visualize your outputs

6 Test your model

7 Here’s what else to consider

Financial Technology

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