CEO of Bruc Bond Singapore Krishna Subramanyan, Country Manager for Poland Krzysztof “Kris” Matuszewski, and Board Member Eyal Nachum in a chat with Konstantin Bodragin, Brüc + Bond Magazine’s Editor-in-Chief.
KB: Hi guys, appreciate your making enough time. To start, what advice is it possible to give a young fintech startup?
Eyal Nachum: Focus on time-to-market. Forget about any devices. You have to have a product around. 80% of the working strategy is better than 100% of nothing. Once you have something working, speak to the people using it. Talk in your customers. They will realize that you’re in the beginning stages and will be more forgiving at the start. They will provide you with the feedback you must have. You can build the other 20% using knowledge. At Bruc Bond, we have been still always actually talking to our customers. It permits us to always improve in the ways our clients need.
Krishna Subramanyan: I would give a fintech startup the identical advice as for any start-up. It would be incorrect to concentrate on your own product or idea, though it is tempting to do this. First, identify an individual population being served, and work to know their pain points. Product follows the anguish points driven from the decision to offer to this client population.
Krzysztof Matuszewski: You need to get methodical. First, find your niche. This will be your market opportunity. Then, researching the market. Check out the competitors to discover whether somebody’s already doing what you would like to do. Find technical partners that will help you avoid hasty decision-making and also to meet your time-to-market goals. Do customer development well. Always check your assumptions and become ready to pivot, to change the course of your products or services development to fulfil the customers’ needs. Then get feedback again. With each technology, new update, every change, you should get feedback. Keep the development/marketing balance healthy. In the early stages, you need to keep your products or services just good enough, but without marketing you may miss your market fit. Oh, and locate investors. You will need funds to grow.
KB: Getting the infrastructure right can make or break a project. What should young fintechs consider when you are looking at 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, so you can have a proof concept. The third stage is 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 have a very good grasp with the rules and stick to them. If you do crypto and wish an account for payroll, your bank could play nice at stage one, although not stage three. Don’t step on any toes. Set up infrastructure in the way that doesn’t break anybody’s rules.
KM: Use credible operational systems and comply with regulations strictly. If you don’t, you can lose your infrastructure. Be rigid with security, and take advantage of integrations when you can. Open banking as well as the PSD2 in Europe showed a whole world of possibilities with API connections – explore it.
KS: Infrastructure must be flexible to adapt to changes in 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 demonstrate to customers that we have been listening all time. Therefore, there has to be something new, exciting on offer that sets the pace inside the first few weeks, months, quarters for the back of client feedback. New architectures must leverage APIs and micro-services to support this pace.
KB: Krishna, are there specific issues when it comes to Singapore and Asia most importantly?
KS: Fintechs here want to perform a lot with very little in a very short time. The teams have become capable but limited in resources. Firms that can thrive in a very mutually supportive environment are the types that win. So, collaborate to experience the pace as well as the vision. For example, when operated banking is just not set in law, the biggest banking players making the effort to reach out to the actual fintechs to interact and collaborate.
KB: Kris, why don't you consider the EU?
KM: There is strong competition inside EU, both among payments fintechs themselves along with banks. The market is well regulated, but there are a whole lot of regulations to check out. In the EU, you must take data rights into account. You need to meet the requirements of the GDPR, the legislation meant to protect individuals and legal entities from new risks inherent towards the data economy. These can be hard to follow along with. On the opposite hand, Brexit offers a chance to attract customers leaving the UK, so there are opportunities everywhere.
KB: B2B [business-to-business] and B2C [business-to-consumer] are two completely 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 get into either a business-to-consumer sales model or business-to-business model. Each model possesses his own challenges, even though the B2C sales cycle tends to get much shorter compared to B2B sales cycle, as businesses are slower to look at new technology. For B2B there is a couple of major challenges. One is that banks provide a set of similar payment products and have an extensive subscriber base. The second is that companies usually have very complicated and extensive product needs, so payment fintech must offer good service and operational excellence to compete around the corporate market. Therefore, companies in the SME sector become frequent clients of payment fintechs. With B2C, other challenges rise towards the top. First of all, there’s money laundering. The importance of regulatory compliance with this is above all else. There is competition from small company credit cards, cryptocurrencies and digital cash, and from money transfer and remittances like a developing niche.
EN: The B2B world wastes about 7 weeks per year on audits and accounting. That’s the reasons you see plenty of ideas about reducing the headache. With B2C you can’t wait that long. There’s always movement and change. There isn’t a real challenge to stability inside B2C sphere due for the number of players, and prices are pretty fixed due to competition. The biggest challenges right now 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 remains the key. Depending around the regulatory climate, banking challenges may differ significantly. Banks react to this particular climate and price of retaining business in different ways. Fintechs must spend considerable time to understand each and every partner’s direction. Ability to match target growth segments of banking partners to their own must be an ongoing, daily activity.