CEO of Bruc Bond Singapore Krishna Subramanyan, Country Manager for Poland Krzysztof “Kris” Matuszewski, and Board Member Eyal Nachum in the chat with Konstantin Bodragin, Brüc + Bond Magazine’s Editor-in-Chief.
KB: Hi guys, many thanks for making time. To start, what advice is it possible to give a young fintech startup?
Eyal Nachum: Focus on time-to-market. Forget about anything else. You have to get yourself a product out there. 80% of an working technique is better than 100% of nothing. Once you have something working, talk with the people deploying it. Talk to your customers. They will know that you’re only starting out and will be more forgiving from the outset. They will supply you with the feedback you need. You can build the other 20% using that knowledge. At Bruc Bond, we're still always talking to our customers. It we can always improve inside the ways our clients need.
Krishna Subramanyan: I would give a fintech startup exactly the same advice as for any start-up. It would be incorrect to concentrate on your own product or idea, even though it is tempting to do this. First, identify a client population to become served, and work to be aware of their pain points. Product follows this points driven with the decision to serve to this client population.
Krzysztof Matuszewski: You need to become methodical. First, find your niche. This will be your market opportunity. Then, researching the market. Check out the competitors to learn whether somebody’s already doing what you would like to do. Find technical partners to help you avoid hasty decision-making and to meet your time-to-market goals. Do customer development well. Always check your assumptions and stay ready to pivot, to change the course of your products development to fulfil the customers’ needs. Then get feedback again. With each era, new update, every change, you have to get feedback. Keep the development/marketing balance healthy. In the early stages, you need to keep your products just good enough, but without marketing you will miss your market fit. Oh, and locate investors. You will need funds to expand.
KB: Getting the infrastructure right can make or break a project. What should young fintechs think about when you are looking for their banking/payments infrastructure?
EN: Approach it in three stages. First, the infrastructure doesn’t matter to customers, just obtain the product out. Second, do basic infrastructure, to help you have a evidence of concept. The third stage could be the hardest from an infrastructure perspective. You have to achieve scale. How? You need a clear customer funnel. Even if it is like it would slow you down, for scale you have to complete it. You also have to possess a good grasp of the rules and stay with them. If you do crypto and desire an account for payroll, your bank could play nice at stage one, and not stage three. Don’t get on any toes. Set up infrastructure in a very way that doesn’t break anybody’s rules.
KM: Use credible operational systems and comply with regulations strictly. If you don’t, you might lose your infrastructure. Be rigid with security, and take advantage of integrations when it's possible to. Open banking along with the PSD2 in Europe exposed a whole realm of possibilities with API connections – explore it.
KS: Infrastructure has to be flexible to adapt to adjustments to understanding and environment. Real-time abilities for future innovation are key. It is becoming harder to retain customers. What is helpful will be the ability to prove customers that we are listening all the time. Therefore, there has to be something new, exciting offered that sets the pace inside first few weeks, months, quarters about the back of client feedback. New architectures must leverage APIs and micro-services to aid this pace.
KB: Krishna, is there specific issues when it comes to Singapore and Asia at large?
KS: Fintechs here want to complete a lot with very little in a very very limited time. The teams are incredibly capable but limited in resources. Firms that can thrive in the mutually supportive environment are those that win. So, collaborate to experience the pace and the vision. For example, while open banking just isn't set in law, even the biggest banking players are trying to reach out to the tiniest fintechs to activate and collaborate.
KB: Kris, why don't you consider the EU?
KM: There is very strong competition inside the EU, both among payments fintechs themselves sufficient reason for banks. The market is well regulated, but there are a good deal of regulations to follow. In the EU, you must take data rights into consideration. You need to meet the requirements from the GDPR, the legislation meant to protect individuals and legal entities from new risks inherent to the data economy. These can be hard to follow. On another hand, Brexit provides chance to attract customers leaving the UK, so there are opportunities everywhere.
KB: B2B [business-to-business] and B2C [business-to-consumer] are two very different modes of business. What sort of unique payments/banking challenges do startups in these spheres face that the others wouldn’t? How can they overcome them?
KM: Fintech companies fall under either a business-to-consumer sales model or business-to-business model. Each model has its own challenges, although the B2C sales cycle tends to be much shorter compared to the B2B sales cycle, as businesses are slower to adopt new technology. For B2B a few couple of major challenges. One is that banks offer a set of similar payment products and have an extensive customer base. The second is that companies frequently have very complicated and extensive product needs, so payment fintech must offer good service and operational excellence to compete on the corporate market. Therefore, companies through the SME sector become frequent clients of payment fintechs. With B2C, other challenges rise on the top. First of all, there’s money laundering. The importance of regulatory compliance in this is more than anything else. There is competition from small enterprise credit cards, cryptocurrencies and digital cash, and from money transfer and remittances like a developing niche.
EN: The B2B world wastes about 7 weeks annually on audits and accounting. That’s the reason why you see lots of ideas about decreasing the headache. With B2C you can’t wait that long. There’s always movement and change. There isn’t a legitimate challenge to stability inside the B2C sphere due for the number of players, and costs are pretty fixed because of competition. The biggest challenges right this moment are cultural. There are language barriers between banker and customer. What we need are solutions for specific niches: the unbankable or refugees, immigrants, banking in other languages, student-specific services, etc.
KS: Selection of global banking partnerships continues to be key. Depending on the regulatory climate, banking challenges may vary significantly. Banks react to the climate and value of retaining business diversely. Fintechs must spend time and effort to understand each and every partner’s direction. Ability to match target growth segments of banking partners to their own have to be an ongoing, daily activity.