Why Your FinTech Startup Needs RegTech
Regulation is a huge issue in the financial sector (you can read more about how it’s affected big banking and FinTech here and here) and also plays a part in other sectors of the business world. Considering how important a presence it is, it shouldn’t be surprising to learn that technology is being brought in to revolutionize the industry—just as it did for FinTech.
Why Should I (And My Startup) Care About RegTech?
True, it took a while for regulation and FinTech to connect in any way and it is not yet fully decided how they are going to work together, but once you find yourself facing that issue you will be glad for the innovation RegTech is bringing to the table.
Dealing with regulations can be confusing, time consuming and stressful. Imagine how great it will be to have a system set in place to ensure you go through this process properly, from due diligence to fraud and risk checks and everything in between, a system that will reduce the costs of compliance and improve your know-your-customer programs. This is what RegTech can do to help your startup.
Take, for example, IdentityMind. This RegTech startup offers risk management solutions and anti-fraud services to eCommerce companies, helping them face the various issues that surface when working in the financial industry. Through its platforms, startups can ensure everything is above board. An incredibly important aspect to your continuing success.
Where And How Can RegTech Help My Startup?
The good thing about new technology is it can help you solve problems before you even have to face them. With the numerous RegTech startups coming into play, you can find solutions for almost any business problem.
KyoLAB, for example, is an up-and-coming startup aiming to be the leader in the mobile compliance field. If your startup uses mobile messaging apps for business communication and you want to be sure no one in your company makes compliance errors, KyoLAB’s platform will give you the technology to monitor and manage company devices. Considering the punishing fees regulators can hand down to financial companies found to be breaking rules (even accidentally), a tool that allows to supervise your staff and make sure they follow regulation is invaluable.
And if you’re aiming to market your services to an international market, Trulioo can help you manage the electronic identity verification process. Its Global Gateway service was designed to help businesses cope with Know Your Customer (KYC) regulations and the company states that it can verify 4 billion people in 60+ countries. Aiming to give an online identity to the billions of people currently lacking traditional ID, Trulioo is a fantastic example of the positive impact technology can have when it’s put to the proper use.
Running a startup is stressful and this is especially true when you’re working in a (relatively) new section of the market. Knowing that fellow startups can help you better run your company, allowing you to move from startup to full-fledged business while under regulation, is a great thing. Isn’t technology great?
How Smart Data Is Taking Over the FinTech Field
In order to improve, companies need to know how to read and use data. That being said, how we read data has changed over the years and new technologies have dramatically changed the game.
Big data brought companies the ability to access massive amounts of information, giving them knowledge not commonly known to previous generations. It was decreed that big data analytics were a must have for companies aiming to rule the modern market. Corporations quickly jumped on board and soon mass amounts of attention and energy was spent exploring the capabilities of this new system. But big data has its flaws. Getting access to a massive amount of data does not mean that all (or any) of said data will meet your needs and deciphering where the useable information is hiding can be extremely time consuming. And as we all know, time is money.
Enter smart data. Thanks to this new(er) technique, businesses can now focus specifically on information that is actually what they need and use that to improve their day-to-day process. Smart data looks at the data and filters out extraneous information to ensure you find what you need. It uses algorithms and looks for patterns or inconsistencies then uses its findings to offer recommendations or warnings.
For FinTech startups, smart data can be invaluable. The main reason is that the data it provides allows the startups to be truly innovative, a must have in order to stand out in the marketplace and attract customers. Said data also increases efficiency and improves the decision-making process, vital tools for a business just starting its run.
But what do startups do when they want to explore the potential of big data and smart data but don’t feel they have the capabilities to do so yet?
This is where MicroBilt comes in. They offer data services for companies that may not yet have the scope or capabilities to launch their own data enterprise. Using their own data systems, MicroBilt has created a line of products to assist companies with their data needs and can offer customizations to help different sized businesses.
One of the clearest ways in which MicroBilt uses smart data to help FinTech companies can be seen in the Know Your Customer (KYC) process. This process hones in on the data needed to confirm a potential customer’s identity, saving companies from issues relating to fraud and helping to speed up the application process. It is a great example of how smart data can be used by financial businesses.
As one of the first entries in the financial data field, MicroBilt has the background and experience to help startups manage their data needs. After all, modern companies need big data and smart data, but not every company has the capabilities to develop their own data systems. Smart startups know they need smart data, and MicroBilt is here to help them find their way.
I bet you feel smarter already.
The Top 10 Things FinTech Startups Can Learn From the Tooth Fairy
In many ways, the tooth fairy can be seen as one of the first successful startups. Created to fill a hole in the market and built up until her services circled the globe, the tooth fairy’s unique business is a lesson for every wannabe entrepreneur who dreams of being the next business savant. Here are 10 things we can learn from the brilliant business mastermind that is the tooth fairy.
- Have a monopoly, otherwise it’s a race to the bottom.
The tooth fairy very clearly understood the first-mover advantage and used it to build her brand. By uncovering a hole in the market and offering a service to meet that need, the tooth fairy created a new industry. Then, by being such a prominent and consistent presence in that industry, she overtook any potential competition. This is a vital lesson if you want to compete in today’s market. Be the trademarked and patented solution to box out the competition. - Have a clear purpose.
Consumers don’t like being unsure of what you are offering. At the same time, a business that is constantly changing its vision loses money in rebranding costs and stalled time in the marketplace. Know your product/service and make it very clear what you are bringing to the table. Look at the tooth fairy: In truth, the idea of a strange creature coming into your room at night could be very unsettling…until it is made very clear that her purpose is just to take your lost tooth and thank you for your service. Then, her beneficial nature is clearly seen and she becomes a treasured part of our society. This purpose has never changed or been corrupted, allowing her to remain a steady and much-loved presence in our lives. If you use this as your model you will bring in customers who will keep coming back for the product they enjoy. - Sell your story & connect on an emotional level.
Want people to remember you and keep coming back for your services? Create an identity and a story that sticks with people. Adults remember the joy of turning over the pillow and finding money where a tooth had been and want their children to experience that elation. This feeling and the memory of that feeling keeps the tooth fairy as the only player in the tooth-collecting business. If you can create a positive link with your customer base they will continue to use you and suggest you to other members of their social circle. - Develop a community.
Although fairy dust allows the tooth fairy to fly around and replace the teeth with a cash reward, there is a strong network working behind the scenes that keeps the entire operation running. From the mint that provides the coins to the dentists who check the teeth to the parents who learn about the missing teeth and put the word out, countless people play their part to keep the ecosystem running smoothly. The tooth fairy can keep making those kids smile with joy in the morning because she knows how the machine works and what her role is within it. Make sure that everyone in your corporation understands how important their part is in making the magic happen. - Target the younger B2C generation and growing population.
The tooth fairy’s market has never evolved beyond children. Why? They happen to be a profitable and consistent market base. In fact, today’s companies spend over $18 billion on advertising targeting children. The reality of the situation is that as one generation ages and you need to move onto new pillows, the route of access is not continuously changing thanks to the newest technology or trends. If you can find a way to access your market base that is not going to need a constant evolution to meet with the changing market then you are going to be ahead of the game. - Go after great profit margins.
Growing up, the tooth fairy traded 25 cents per tooth and the profit margins continue to increase faster than inflation. Having two kids of my own, I have experienced the market rate for a tooth at $5 per tooth, making the tooth trade one of the more profitable industries. If you can find a similar pocket in the market your business will continue to be a success. - Use a global distribution channel.
The greater your reach the greater your market (and profit potential) is. The tooth fairy, with her global distribution channel, has access to the 2 billion children currently living on the planet. Remember this when you are contemplating where to market your business. - Make sure you have great timing.
If the tooth fairy showed up in the middle of the day, the tooth wouldn’t be under the pillow and the magic and awe of how she snuck in while you were sleeping would be ruined. Similarly, if she showed up after all your teeth had been lost, her services wouldn’t be needed. This is like your presence in the market. Timing really is everything. If you get in before other businesses wake up, you will get the prize; meanwhile, if your product hits the shelves at the wrong time, the magic won’t be there and it won’t sell. - And great service.
Your product can be amazing, but if you give clients bad service they will find a different provider. You need to be reliable and—if you want to ensure they keep coming back—you need to give them that sense of thrill that comes from turning over your pillow and finding that monetary reward. The tooth fairy doesn’t let anyone down and neither should you. - Work with low overhead & strategic partnerships.
With a virtual office and cloud technology, the tooth fairy runs a tight ship with low to no-costs. With the right strategic partnerships with people who care (their parents) the eco-system works fluidly. Your startup will have a better chance of growing if you can use these examples to improve your business process.
The tooth fairy has been around for centuries and it is unlikely that we will see her retirement at any point in the near future. However, as money is changing, the reward future children receive will likely be very different from the coins of today. The question then becomes: Who will be the first innovative kid to receive an etransfer from the tooth fairy?
Need a Mortgage? Why You Should Choose a FinTech Startup
The 2008 financial crisis was caused by irresponsible lending by the big banks and the panic that arose when the ramifications of their actions were fully realized. This crisis did more than just cause a market meltdown: It made people aware of how little control they had over the financial world and led to mass protests against the financial districts of Wall Street, Bay Street, etc. This outright disdain towards the 1% may have slipped into the background, but the lack of trust towards the big banks remains. But what do people do when they want to enter the real estate market but don’t trust mainstream financial brokers?
FinTech companies are very aware of this reality and are doing their part to ensure that the financial mistakes that led to the greatest economic crisis since the Great Depression are not repeated. Today’s FinTech lending startups are vast improvements on the services the big banks have been offering to clients, giving people the opportunity to obtain loans without interacting with a broker with questionable loyalties.
Do Your Own Mortgage is one startup that knows how to make customers happy. It gives people control over the mortgage application, allowing them to track the process throughout, then gives them a cash rebate at the end of the process. With access to 50+ lenders, the Do Your Own Mortgage process can offer clients solutions that provide them with the most optimal rates and terms and give them the opportunity to check on the application status on their own time via the website.
Then there is Mogo, “The mortgage experience designed to help you get mortgage-free.” This startup works hard to make the mortgage process as easy and pleasurable as possible, offering fantastic rates and rewards like champagne and dinners for successful mortgage payment markers. It’s true: instead of wondering if your mortgage payments are going towards a champagne bath for your big banker broker, you can sip the bubbly and congratulate yourself on your new investment and home.
Mogo also motivates its users through an online dashboard, an easy way for people to check payment progress and see what rewards are in their future.
Home ownership is seen as a rite of passage, but the concept of a mortgage often fills people with a sense of dread. Add to that the distaste many potential homeowners have towards the big banks and you can see why the situation could seem like a nightmare in today’s marketplace. A FinTech mortgage offers a different experience, improving the situation for everyone.
And the Financial Innovation FinTech Award Goes To…
On Monday November 21, 2016, the Digital Finance Institute—the world’s first FinTech institute—brought together financial innovators to recognize the amazing work Canadians are doing in FinTech. This was the second year for the Canadian FinTech Awards and the awards recognized the many people who are involved in the development of this ever-growing field.
Startups were well represented, with Wealthsimple receiving the FinTech of the Year – Startup Award, Ferst Capital Partners winning the Judge’s Choice Award, DMZ winning the Accelerator, Incubator or Entrepreneurial Network Award and Ryerson University being recognized for its Zone Startup. OMERS Ventures, which won for Investor of the Year, also has strong links to the startup community as it has funded many of the high-profile Canadian FinTech startups.
There was a strong link that tied the winners together: Investment. Whether they were investing in FinTech or using FinTech to help others invest, the companies showed the great financial opportunities that exist within the FinTech field.
The future is obviously very bright for these Canadian FinTech innovators and it is fantastic to see them get the recognition they deserve. As FinTech startups continue to revolutionize and improve the financial services industry, it will be very exciting to see how their innovations change the world.