The financial technology (fintech) industry dates back to the late 20th century, with the advent of electronic banking and online stock trading. Since then, the fintech industry has evolved and changed due to technological and internet advancements.
As a result, new products have been created that increase the accessibility, simplicity and efficiency of the financial services industry. Expert Sergey Kondratenko spoke about fintech startups, which startups are the most popular and promising in the modern world?
Sergey Kondratenko is a recognized specialist in a wide range of e-commerce services with experience for many years. Now, Sergey is the owner and leader of a group of companies engaged not only in different segments of e-commerce, but also successfully operating in different jurisdictions, represented on all continents of the world. The main goal is to drive new traffic, create and deliver an online experience that will endear users to the brand, and turn visitors into customers while maximizing overall profitability of the online business.
Sergey Kondratenko: history and stages of development of fintech startups
The global financial crisis of 2008 increased customer interest in alternative banking and financial services and stimulated the development of the fintech sector. The advent of mobile devices and the widespread adoption of smartphones have further fueled the growth of the fintech industry. At the same time, clients received access to financial services from anywhere in the world 24/7.
According to Sergey Kondratenko, fintech startups help make people’s lives easier in the financial sector, making it more convenient and comfortable. But like everything in our world, fintech startups also have their own history and stages of development.
First stage: start of fintech development
This phase began in 2005, with the emergence of the P2P lending platform Zopa.
- Many people think that fintech began with the advent of PayPal. But it should be borne in mind that at that time PayPal was just a company that dealt with electronic payments. And the main idea of fintech is the use of Open Finance, API and high analytics, clarifies Sergey Kondratenko.
Soon after the launch of Zopa, fintech startups began to emerge one after another. Their initial task was to replace banks. However, over time, the fintech community realized that the goal should not be replacement, but collaboration. The same realization came in the banking industry, when large financial companies realized that they could introduce and develop innovations together with fintech.
Second stage: gradual implementation
At this stage, the first hackathons began to be held and innovation centers were organized, which were financed by banks. Fintech began to gradually integrate into people’s daily lives, moving from the world of “geek” applications to reality.
Third stage: partnership and integration
Over time, fintech has become an integral part of the lives of many financial consumers, and their number has only increased.
The future of fintech lies in close integration, says Sergey Kondratenko. According to his observations, today companies are uniting in search of a common goal. In the coming decade, we can expect the fintech sector to be fully integrated into the banking system through Open Banking and Open API mechanisms. This will lead to a shift from simple partnerships to deep integration between fintech and banks.
Fourth stage: update
There will be open markets, APIs, applications and comprehensive analytics. This will allow banking services, fintech and bigtech to be fully integrated into a single and completely new whole. There will be no more debate about the role of fintech in banking. Fintech technologies will be inextricably woven into the global financial system.
Growth and development strategies of fintech startups – Sergey Kondratenko
With the number of fintech startups constantly growing, it is becoming increasingly important that they have a solid development strategy. Here are the three most effective of them, according to Sergey Kondratenko.
Creating a financial strategy. If the company develops along the path of a long-term financial strategy (the most recommended), then the following should be taken into account:
Investments. They should be aimed at increasing the value of the company, and you can choose one of two types of growth:
Inner growth. This could be, for example, business expansion.
External growth. One strategy could be to eliminate competitors, for example through a merger.
On the other hand, financial strategies for the short term should focus on the following aspects:
Working capital. It is important to find the right balance of risk and return.
Current responsibility. The strategy ranges from using discounts for prompt payment to approaching a financial institution for a loan.
Development of a user-friendly application. In fact, 90% of millennials use their mobile devices for most banking and financial transactions on the go. With this shift to mobile, it is now more important than ever for fintech startups to have a user-friendly app.
- This is the best way to achieve the desired result. It is necessary to conduct thorough market research on the target demographic group. To do this, it is necessary to collect data on which functions are most important to them and create applications taking into account local needs, advises Sergey Kondratenko.
Implementation of a comprehensive marketing strategy. Creating a customer base is one of the most important tasks of fintech startups. This is why it is extremely important to implement a comprehensive marketing strategy.
One of the most effective ways to solve this problem is to implement an inbound marketing strategy. It allows you to reach more people with your brand through content, SEO, and conversion rate optimization (CRO).
Sergey Kondratenko believes that by implementing all three components into the marketing plan, fintech startups can not only continue to increase the number of customers, but also find new and creative ways to interact with them.
The expert believes that fintech startups that are looking to expand their business should focus on implementing growth strategies.
Current trends and tendencies of fintech startups
Some global trends in fintech have existed for a long time, while others are only gaining momentum. Sergey Kondratenko draws attention to current trends:
Virtual bank cards. These are digital credit/debit cards that are stored not in your pocket, but in an electronic wallet. They are offered by both neobanks (e.g. Revolut, Monzo, Monobank, N26) and traditional banking institutions such as Bank of America or Capital One.
Built-in finance. While the concept of embedded finance is nothing new, it could be the next revolution in payments. Non-financial organizations are already offering traditional banking services through Open Banking APIs.
Buy now, pay later 2.0. BNPL is steadily gaining popularity. This new fintech trend allows customers to enjoy the products they pay for, thus promoting long-term customer loyalty.
Alternative payment streams. People prefer to choose a way to pay for goods and services. Venmo, Stripe, Wise and other BaaS platforms allow them to use ACH and wire transfers, debit/credit card transactions and other payment methods that are not subject to bank restrictions.
Stable coins. Currently, stable coins are becoming one of the global trends in the field of fintech. Stablecoins combine the transparency and decentralization of a blockchain with the stability of gold/dollar-backed fiat currencies. This should reduce the volatility of cryptocurrencies and become a reliable basis for building decentralized financial systems.
Artificial Intelligence and Data Science are one of the hottest trends in the financial industry, as they provide customer self-service and contribute to the development of technologies such as biometrics - recognizing a client by individual characteristics - fingerprint, keystroke dynamics, face.
Banking as a Service. Open banking (or BaaS, Banking as a Service) allows third parties to use banking infrastructure through APIs.- Following the principles of open banking when developing a fintech product ensures the convenience of attracting clients and exchanging data between applications. Allows you to analyze, authenticate users and establish communication with them,- says Sergey Kondratenko.
Microservices and modularity. A logical continuation of almost all of the fintech trends listed above is the need for modularity, flexibility and ease of customization of a fintech product. Microservices are one of the ways a fintech startup can remain open to integrating any new fintech trend.
Popular fintech startups in 2023
In the modern world, there are more than 30 thousand fintech startups, and new projects appear every day. The success stories of the most popular of them, according to Sergey Kondratenko, may well serve as examples and incentives for aspiring entrepreneurs who want to break into the fintech industry market.
Stripe is the world's leading online payment processor. Nearly 2 million customers worldwide use Stripe, and nearly 3.1 million websites use it to process payments. Some of the largest companies in the business world, such as Sony, Amazon, and Target, use Stripe to process online payments.
The Stripe platform was created in 2010. It has received $23 billion in funding and is backed by established investors like Sequoia Capital. With its powerful payment processing and card issuing solutions, Stripe has earned its place among the leading fintech startups. Users are offered a wide range of solutions, including billing, payment gateways and hardware POS terminals.
Robinhood is another popular choice among fintech startups due to its innovative use cases. It is an investment brokerage app that helps users invest at no additional cost, via mobile devices or desktops.
Robinhood's main advantage is its optimal interface with an intuitive design. Users can invest in stocks and ETFs, as well as cryptocurrencies, through the Robinhood app without much hassle. The app's simple watchlist feature helps you keep track of your assets.
– The achievements of leading startups prove that fintech is capable of radically changing the world, says Sergey Kondratenko. – Apart from the benefits of money transfer, fintech startups offer a wide range of solutions to suit different user needs.