FEBRUARY 17, 2023
10 min read
Scalability usually becomes an issue for late-seed fintech startups that have achieved success in their homescape and want to conquer new horizons. And, in terms of the current market state, different markets give different opportunities. In some countries, the revenue generation would be higher as for example the Asia Pacific region, which is expected to generate $96 billion in revenue by 2024.
So, if you want to figure out how to scale a startup internationally, you’ve come to the right place. Read on, and let’s find out what you can do to widen your presence on the world’s scene.
Why Is It Important to Scale a Fintech Internationally
Fintech global domain is now living through a hard time as we enter a period of a new major financial institutions crisis. With remnants of a previous shock, after COVID-19 initiated issues, the fintech industry gained what was lost, only to be forced to pivot down again.
However, things are looking bright with the recent expert market research stating that the fintechs market will be able to attain $492 billion by 2028. So, growth is to be expected, and fintech hubs are trying to attract more startups to accelerate the market’s digital transformation.
But why is it important to scale fintech start up? Scaling has its benefits for business, and they tend to be even more visible with finance technology businesses. So, let’s break them down one by one to figure out why scaling can improve your firm.
The Benefits of Fintech Scaling
- Enhanced efficiency and network.
If you achieve a certain level of scalability, you also ensure that your business can operate in any circumstances. Scaling internationally allows you to omit local crises and adapt to new conditions much faster. Aside from this, you attract more investors, global or local, and help your firm be a part of a much larger scene. Not to mention how rapidly your customer base will grow if you handle the scaling process right.
This is controversial, but scaling can improve your competitive edge. Being present in different markets means you have more firms to compete with, but enrolling in a global market takes you to a different level. You no longer compete with local businesses, now your competitors are more advanced, and the fintech business plan of your company has to advance accordingly.
With entering a global scene, you now have more options to survive the highs and lows of the industry. More customers and streamlined omnichannel operations allow you to ride the wave even in crises because when the industry fails at one hub, it still holds at the other. For example, 2022 was a challenge for most of the companies with a global investment decrease, Singapore had 41% rise in investment compared to 2021.
What It Takes To Scale a Fintech Internationally: 5 Steps
So, you know that scaling is beneficial, and it’s time to create a scalability fintech startup business plan finally. Scalability planning starts when you only grow your idea, planning the software architecture. Then, after you have customers’ feedback and a wider understanding of the market demand, it is safe to start the journey.
As a company with over 12 years of experience in fintech product development, we’ve seen both highs and lows of scalability plans. And now, we’re sharing this experience with you.
1. Have a clear perception of your resources
Scalability often seems like a win-or-lose type of situation when it is more like smart betting. To make a good gamble, you must access the data you have on hand and compose an assessment based on your knowledge.
In terms of fintech scalability, you have to access your resources; clearly and objectively. Start with finances; evaluate the reliability of your investors and the continuity of your financing. Budget forms a steady ground you need to scale.
Then, access your technical capabilities for scaling and compare them with the assigned budget. You would need to modernize your product to scale, and thus the investment will be heavier.
Taking into account the technical resources, don’t disregard human resources, too. Make sure you’re clear with your team about the future company’s fintech business plan, and they are on the same page with you. Expand the team as you scale according to the business needs, don’t try to bite more than you can chew.
One more important step during the resource assessment is to adjust fintech metrics to help you figure out the effectiveness of scaling. Here are a few KPIs we recommend you take a look at.
2. Mitigate the risks
As your startup becomes a growing fintech, you will encounter more challenges and risks, both financial and non-financial. Fintechs and challenger banks might face increased regulatory scrutiny, so it’s important to consult with third-party agencies to ensure compliance with the country’s legal requirements for banking.
Aside from this, the greatest pillar of the success of fintech for startups is enhanced security measures. According to Edgescan’s 2022 Vulnerability Statistics Report, around 46% of applications today state significant vulnerability issues. The risks of getting involved in cybersecurity incidents are peaking; fintech attracts nearly a third (27%) of cyberattacks.
So, giving your users advanced security measures is not a competitive leverage but a must for quality scaling. Here are some measures you can take to ensure your users and their data are saved from fraud:
- Two-factor authentication;
- Data encryption;
- Role-based access;
- Systematic logs and security testing.
One of the most important take-ups for risk mitigation is scalable architecture which you plan and create in the initial stages of the development process. Talk to your software provider to ensure they know of your scaling plans, and there you have it–one successfully passed milestone.
3. Enhance customer experience and engagement
Scaling is not only about being present across the globe but also about having more customers. So, it’s all about finding a balance between new customer acquisition and retention of the existing ones.
Accentuate how your existing customers can benefit from your financial services since those people are fundamental for scaling. Many fintech companies focus on their stakeholders and first adopters to accelerate or incentivize the growth process before attracting new audiences to the business. Enhance your value proposition to extend the reach, but sharpen the leverages you already have to not to lose the advantage.
One of the best ways to enhance customer experience is by implementing gamification. In fintech, this feature can help users build a regular routine with your app. For example, you can give badges and rewards to users who use your cards to pay for certain services or have a few months of using a streak.
Innovative technology like AI or machine learning can also be extremely helpful for better engagement. Give more personalized advice and use customers’ data to refine their experience.
Data analytics is a hit in the fintech sector, with nearly the biggest financing in 2022. Artificial intelligence didn’t go far from it, with chatbots for customer support that drastically saved time and budget. Automation can do most of the manual work with the same or even increased effectiveness, and in scaling conditions, it can dramatically improve workflow efficiency.
Implementing CRM solutions is one of the best ways to use automation services for fintech startups. It correlates with the previous paragraph since CRM can increase customer satisfaction and gather feedback to help you improve your software.
5. Set the stage for international scaling
If you wish to know how to scale a fintech startup, here’s the short answer: be ready to explore and research. The first concern yours has to be regulatory compliance with the licensees for banking. Some large companies, such as Revolut, are still struggling to get much-needed regulations to operate in the selected territories fully.
Take care of establishing the process of smooth international payments and ensure that your software has multilingual support. Don’t try to cut language costs, as it will affect the customer’s satisfaction.
Analyze your audience and give them what covers their pains the most. Wahed, a halal investment platform, recently scaled to the UK by opening a physical bank on Baker street. They are sure of the high customer acquisition since they assessed their target audience in the United Kingdom and reckoned that Muslim customers would rather trust a traditional bank with a physical office than an online-only institution.
So, with the steps, you know how to outline and roadmap the scaling of your fintech startups. But, there are challenges you will face, and DashDevs, using our experience with fintech products, can provide you with possible solutions to those issues.
The Challenges In Fintech Scaling
Entrepreneurs are worried about the low investment rates, offline bank departure, and other objectionable market conditions. However, if you can face those challenges and come out of the water dry, your startup will most likely pivot like a rose on the concrete. So, what obstacles you might face, and how to fight them? Let’s uncover it below.
1. Security-related issues
We’ve already discussed security as one of the most crucial aspects to pay attention to during the scaling process. So, it’s important to note that many key industry stakeholders consider security a top priority for their company.
Covering the topic in more detail, we have to mention the specific problems companies are likely to withstand in 2023.
First, cloud computing issues. A new technology adoption could bring more problems with it since, along with obvious benefits like enhanced speed, accessibility, and scalability, the cloud is a large data pool which makes it a perfect target for cyber attackers. It doesn’t mean you cannot use beneficial cloud computing for your business, especially given how good it is for scalability; just be more attentive to your options. Choose a reliable provider with up-to-date technology and strong security guarantees.
Second, malware attacks. Ransomware attacks didn’t seize with time, on the contrary, they became even more of an issue. According to recent research [by Sophos], these attacks increased by 62% compared to 2021. And the reason why they still stand so tall is that no one can mitigate human error. They have multiple entry points and all it really takes for a malware attack to happen is one careless click on a link or email from an unknown address. So, how to scale a startup business with such risks at hand? The answer is easy enough, automate the processes. Install automated malware detection software to protect your information from leaking to the web and use data backups to recover quickly.
Third, identity theft. Imagine this, any password your customer uses can be hacked. Even biometrics aren’t a safe enough option since it too can be replicated. How can you protect your customers when you scale and play on the bigger market? Use what corporations have been using for ages, double or triple entry gateways. Implement double authentication and treat it as a must not only for competitive leverage but for your customers’ sensitive data protection.
2. Accessibility issues
One of the challenges that are often underlooked is the accessibility of fintech applications for different users. The world is becoming more inclusive, which is undoubtedly a miraculous tendency; however, you must also make sure that you participate in it.
When developing an application UI, make sure that it works well on any screen, as the country you might scale your startup to might have more Android users with all kinds of devices. Aside from this, ensure that sight-impaired people can access the text and the application is easy-to-use for everyone, including people with disabilities.
People of all ages and financial statuses use fintech software. Everyone can use online-banking or use applications like Venmo for money transfers. So, when thinking about monetization options for your scalable software, add options for different users with different financial capabilities.
If you’re adding a subscription model, add several options with various features available. If you’re more inclined to add transaction fees, use beneficial terms to make your app more attractive to end customers.
To figure out how to scale a fintech, you will have to undergo some challenges we didn’t mention in the article. To be honest, the scalability process is different for each startup and each idea behind it, and this article only scratches the surface of an iceberg.
There is a lot to figure out, and a lot to do and understand to succeed, but the chances are great if you have a reliable technical partner beside you. If scalability is what you plan for your business, contact DashDevs, and together, we will find a way for you to withstand any obstacles.
How can I improve my fintech?
There are several things you can do to help your fintech startup leverage the competition. First, ensure that the APIs you use are reliable. Apply advanced security measures and consult an agency to help you comply with legal regulations. Think about implementing innovative technologies, like AI, ML, blockchain, or big data; or, on the contrary, don’t use any excess features and technologies if they won’t benefit your business.
What is the biggest challenge in fintech?
For years, security issues have been the biggest obstacle for fintech startups. Since financial technologies store a lot of users’ sensitive information, it’s crucial for them to trust those technologies. To figure out how to find the best security solutions, consult a reliable technical partner about what software you can implement to guard your customers against cyber criminals.