The fintech field is booming at the moment and is expected to grow by a compounded average growth rate of 63% leading into 2025. This is a great time to enter the industry since there are so many opportunities to help the unbanked and underbanked in the world and this country. More people are also interested in investing, and fintech offers them an easy way to get into the markets. However, fintech is not an easy field to get into and building a fintech startup comes with many challenges. Let’s take a look at a few things you should know before you enter the fintech business.

1. It’s Heavily Regulated

You have to expect to deal with regulatory agencies almost daily when you’re in fintech. You’ll be handling very sensitive information and mismanaging this information could have far-reaching and disastrous consequences for the people involved, especially if you’re dealing with large institutions.

So, you have to be ready to abide by all sorts of regulations, and not only at the state or federal level. You might have to deal with other regional regulations if you’re dealing with non-US clients along with international agreements like Basel III, the CAN-SPAM Act, and AML regulations. You will need to spend a lot of time learning these and you will probably have to hire either a lawyer that is specialized in the field or a consultant that will help you stay compliant.

2. Fraud is Rampant

You should also know that fraud is rampant in the fintech industry. Banks and other financial institutions deal with thousands of frauds and cases of stolen identity every year, so you can only imagine how easy it can be to commit fraud when you can sign up for a service using a mobile phone. This is why you will need to focus on security but especially on knowing exactly who is opening an account with you.

You will need to look at bank identity verification tools like the ones offered by Envestnet | Yodlee. They have a bank identity verification API that you can integrate with your application which will verify your clients’ bank account information fast without them having to leave your app. They will help simplify the KYC (know your customer) process and only require a user’s phone, email, or address for verification.

3. Your Fate Will Largely Depend on Outside Capital

Most successful fintech startups have had to bring outside investors at some point in time, so you will have to work with that in mind. You also have to be careful with who you bring in since you’ll be tied to them. Do not accept the first offer that comes your way and work with people who can enrich you with their expertise or those who can introduce you to a large network of potential customers, partners, and team members.

Fintech is one of the most vibrant and promising fields in the world, and with the proper plan, it is possible to succeed. But you have to be ready for some of the forks that may show up on the road first.

As an experienced business and finance writer I understand the corporate landscape and the driving forces behind it. Over the years I’ve shared my insight and knowledge with key industry publications and dedicated my time to showing how business leaders can make their organisations more effective.