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FinTech Startups: A Complete Guide

6 MIN READ | 2022-02-22

FinTech Startups: A Complete Guide

Financial Technology uses technology to make financial service companies more efficient, effective and accessible. The internet has brought a tidal wave of change for the financial services industry. For years, banks have been working to improve their digital channels, but now they are threatened by startups that promise new, cheaper and better access to financial services.

Never before have startups had such an opportunity to disrupt one of the world's largest industries, but to do so, they must first understand how the industry works.

This guide will help you understand the FinTech industry and startups as you search for job roles in this sector.

The fundamentals

FinTech startups use technology to offer financial services that disrupt incumbents. These startups usually target one specific service in the finance space and deliver it more cheaply than incumbents through new technologies.

This does not mean you need to be an engineer or developer to work in a FinTech startup. Instead, startups offer many different roles that do not require a technical background, such as marketing, sales, customer service & market research. 

Who are the key players in the global FinTech industry?

Several organisations belong in the global FinTech industry. These include:

  • Banks (such as HSBC, Barclays, Wells Fargo)
  • Payments companies (such as PayPal, Stripe)
  • Payment processors (such as Worldpay)
  • Investment companies (such as Blackrock, Vanguard)
  • Lending companies (such as Kabbage, Zopa)

FinTech startups

Fintech startups are on the rise. Now more than ever, non-bank entities are driving innovation in the financial technology industry. This is causing a radical shift by challenging conventional value chains, business models, and market positioning.

What are some tools startups use to disrupt incumbents?

In the digital age, customers expect a smooth and easy user experience. This means that startups can add value by providing a better and more efficient experience than incumbents offer. The tools that startups can use to disrupt incumbents include:

  • Artificial Intelligence - Startups use AI, machine learning and predictive analytics to predict customer needs better than humans. This means they can offer customers a smooth and personalised experience.
  • Big Data - Startups can also leverage data better than incumbents as they do not have legacy systems holding their data. They can analyse data and use it to offer better customer experiences, such as AI-led chatbots that provide instant responses.
  • Customer Service - With little room for error, startups must provide more personalised service and be easier to use than incumbents. Startups can use technology to allow customers to do things such as applying for a loan online. This reduces the need for human interaction and can, therefore, offer better customer service than incumbents.
  • Customer Experience - There is more room for improving the customer experience in this sector than in almost any other industry; consumers expect their interactions with organisations to be easy and personalised. Startups should take advantage of this and use technology (such as AI) to make more accessible and more efficient user experiences.
  • Marketing - With many digital channels available, startups may target users through digital or social media ads rather than traditional print or TV ads. Startups can be elegant and versatile if they can attract new customers from different channels.

Open Banking - In many countries, banks are required to open up their data to be used by third parties. This means startups can access customer financial data and provide automated savings apps or early warning systems for credit cards.

FinTech startups on the rise

It is easy to see why FinTech startups are on the rise. The environment today, characterised by digitisation and openness towards innovation, has allowed new market entrants to emerge.

 Startups have several competitive advantages over incumbents, including:

  1. Speed of execution - By concentrating resources on fewer product lines, startups can move faster than large corporations that attempt to be all things for all people.  Therefore, they can often be the first into a new industry or area of business.  
  2. Market reach - Large companies are limited in how quickly they can expand due to existing markets, whereas startups do not have these restrictions. This means they can build their customer base more rapidly through innovative ideas and strategies.
  3. Cost efficiency - By focusing on specific market areas, startups can operate more efficiently than large corporations. This means they can cut costs and offer lower prices to customers, which leads to better acquisition rates.
  4. Customer relationships - Startups have closer customer relationships than larger companies as their focus is often on fewer products or services.  As a result, startups can better meet customer needs and expectations.  

Technology awareness - Startups understand technology trends to adopt new technologies that incumbents may not be aware of yet. For example, small FinTech players were early adopters of blockchain technologies, whereas many large banks ignored it for years before catching up recently.

Working at a FinTech startup

What are the perks of working at a FinTech startup? In addition, what challenges do FinTech startups face? Let's find out.

FinTech startup perks

Financial industry expertise

Many startups are founded by industry experts who have a deep understanding of the market they are targeting. This can mean startups have a greater chance of success in an already familiar area. 

Creative environment

As a startup has fewer employees, there is usually more room for creativity and innovation in how work gets done. Senior employees aren't stuck doing routine tasks because there aren't enough people to do this type of work.

Innovation culture

A FinTech startup often encourages its employees to think outside the box and develop new ideas that may help define the company in the future.

Competitive salary

Compensation offered by FinTech startups tends to be competitive with larger companies in the financial industry. This means you don't have to work for peanuts when you start your career in finance.  

Flexible work schedule

In many cases, startup employees can dictate how their work gets done so long as deadlines are met — this type of work is also known as output-based. This implies working from home for part of the week or getting in later in the morning, among other options. 

Greater sense of accomplishment

Startups prioritise creativity and value employees with unique ideas that move the company forward. This means you'll feel like your ideas and efforts make a big difference in how operations are run at your startup.

What challenges do FinTech startups face?

Inexperienced employees

Startups often lack years' expertise in the industry, meaning they need to hire less experienced employees and train them in-house. Also, where there may be gaps in knowledge related to the finance sector, they may consult with an expert outside the company.

Shortage of resources

Startups often have a small number of employees and limited funds, which means stretched resources. This can indicate that it is difficult to complete complex jobs that require several people to work on them simultaneously.  In some cases, tasks may need to be outsourced as there isn't enough money or expertise within the startup.

Competing with large competitors

Startups often compete directly with giant financial institutions, which means they need to offer a unique and compelling value proposition. Unfortunately, this can be difficult to do when your startup doesn't have the budget or reputation of large institutions. As a result, some startups may choose to target niche markets underserved by larger banks.

Top FinTech startups in the Netherlands

The Netherlands is home to many promising FinTech startups and has a vibrant startup community. The Dutch FinTech market is dominated by new payment technologies, crowdfunding, and finance apps. Here are some of the most notable FinTech startups in the Netherlands:

Adyen

Founded in 2006, Adyen is one of the fastest-growing startups in the Netherlands, and it specialises in online payments for businesses, manages risk and settles payment.

 Now active in over 200 countries with 24 offices globally, Adyen has received over $266m in funding to date.

Are you looking for job opportunities at Adyen? Explore all available positions at Techleap's job board!

Mollie

Mollie is a payment processor that was founded in 2004. It helps merchants of all sizes by providing an easy-to-implement payment integration for websites and apps. This makes it possible to use different local payments methods through a payments API.

Mollie completed their Series C round in June 2021, raising a cool €665 million that resulted in a company valuation of €5.4 billion.

Are you looking for job opportunities at Mollie? Explore all available positions at Techleap's job board!

Factris

Amsterdam-based Factris knows that cash flow is essential for business growth. Hence, the company uses technology to help SMEs with factoring, invoice financing, and debt management. Since its founding in 2017, the company has raised €63 million and been honoured with multiple awards such as the 2021 Business Excellence Award from Acquisition International Magazine.

Are you looking for job opportunities at Factris? Explore all available positions at Techleap's job board!

BUX Zero

BUX Zero is a fast-growing neo-broker founded in 2014. The BUX Crypto app and BUX X Solution allows customers to buy and sell shares and exchange traded funds without paying commission. They can also invest in cryptocurrency and CFDs.

The firm's most recent round of financing, which garnered €67 million in Series C capital, occurred six times faster than it did in 2020. Parallel to this, BUX has seen a six-fold increase in users since 2020.

Are you looking for job opportunities at BUX Zero? Explore all available positions at Techleap's job board!

 FinTech companies are generally focused on innovative technology products and services while positively impacting the finance sector. In addition, these companies often wish to make financial services more affordable and accessible while rewarding customers for loyalty. Although startups may lack some of the resources of larger banks, they also have similar benefits, including competitive salary, flexible work schedule, and greater ownership over work responsibilities.

Conclusion

FinTech startups are a great place to work for those looking to grow their career in finances & technology or explore how tech can disrupt the market. Startups have unique opportunities that aren't available elsewhere, such as the ability to take on more responsibility and ownership over your job. In addition, you can also connect with industry leaders through these companies.

If you're interested in working at a FinTech startup, you can find a list of startup jobs on Techleap's job board.