How can you avoid common fintech innovation pitfalls?

A fintech will often make particular efforts to focus on a widely known real world challenge that exists today. Those challenges may vary from access to funding (loans), liquidity products (deposits), transaction processing and payments (bank accounts and money transfers) or insurance related products that are innovative and different from the current incumbent players. The solutions that are developed specifically target those problems eg time to access the product, complexities in the approval process or legal steps that can often result in not a great customer experience. The user experience (UX) and user interfaces (UI) are critical to ensure that it indeed will move the dial whilst still meeting regulatory requirements…cont below

Launching an MVP is crucial. It allows one to introduce a basic product version to a select group of users. This not only helps in gauging user interest but also in identifying potential flaws or areas of improvement. The feedback received from the MVP can be invaluable in refining the product. Not every idea will be a home run. However, every failure provides a learning opportunity. It's essential to analyse what went wrong, understand its reasons, and use that knowledge to improve. Continuous engagement helps understand changing user preferences, potential pain points, and evolving market dynamics. Regular surveys, feedback sessions, and user forums can be beneficial.

e.g. Stripe and Square partnered with traditional banks and leveraged their regulatory expertise to navigate complex financial landscapes. Entering any highly regulated industry is resource-intensive, thus, the best strategy is to have a pool of partners who know the ins and outs of their respective sub-domains to reduce investments

With multiple partners' combined resources and expertise, the time taken to launch a product or service can be significantly reduced. Established players can provide the necessary infrastructure, while startups can drive innovation, ensuring a faster rollout. Collaborative efforts can lead to co-innovation, where multiple entities come together to brainstorm and develop groundbreaking solutions that might not have been possible individually.

Continue from above..Too often things like accounting treatment, reporting and compliance get left as after thoughts. Whilst at the time it’s understandable, these hidden surprises after the fact can hurt capital raising, reporting and cash flow insights. The key is ensuring you cover all bases early and avoid corner cutting which is often looked at as innovative vs operational risk.

Ethical Considerations Ethical questions are becoming more important with the increased use of data and AI in fintech. Make sure that your solution respects user privacy, handles data ethically, and is free of prejudice. Ethical failures may not only cause regulatory problems, but they can also harm your brand's image. Scalability When designing a fintech solution, always consider its scalability. As your user base grows, your solution should be able to handle the increased load without compromising on performance or security. Sustainability Consider how your fintech solution can contribute to sustainability. Integrating sustainability into your solution can provide a competitive edge.