Why You Should Start a Fintech in 2021
By: Camille Tyan
Tags: Fintech, Founders, API, Startup, 2021

Fearless Girl of Wall Street, Photo by Lloyd Blunk on Unsplash

In brief: I am working on new fintech projects and wanted to share why I am more excited by the space than ever. Let me know if you’d like to be part of it!

When I started working in payments, very few people used the word fintech and PayPal was the only known name in the space. Eight years later, fintech has 70 unicorns valued at $250+ billion and leading VCs predict that it will be the next big platform after the internet, cloud, and mobile.

My journey started with PayPlug, an online payment company I founded in 2012 and later sold to one of Europe’s largest banks, BPCE. With a small team, we built a simple solution that helps thousands of small businesses sell securely online. By focusing on user experience, we were able to compete against large incumbents who hadn’t seen newcomers in decades.

Starting companies is one of the most rewarding careers: you get to envision the future, invent a solution and bring together talented people to make it real. But the nature of fintech allows founders to play at a whole other level. Here’s why.

The market is huge and growing 🐘

Financial services are enormous. Payments and lending are the backbone of all economic activity. Together with investing and insurance, they generate trillions of dollars of revenue each year. The whole sector is expanding fast, and ambitious startups are there to make the pie grow.

2010 vs 2018 Financial services net income and market cap (Source: Refinitiv, Oliver Wyman)

You will learn 🎓

Launching a fintech is an exceptional opportunity to learn. While bank executives often specialize in specific areas (e.g., compliance or partnerships), Fintech founders become experts across all topics of banking: payments, banking operations, risk management, IT security, anti-money laundering, regulation. With this 360-degree view, they take a fresh look and bring new ideas to an industry where players rarely take a step back.

Harder, better 😅

If you agree with Sam Altman that it’s easier to succeed with a hard startup, this is definitely the place to start. Launching a fintech is like launching a SaaS startup and a bank at the same time. You will need to build and grow a tech product while creating secure operations subject to strict regulation. And you’ll be facing giants: incumbents are fighting back — by investing in technology, UX and marketing — because they have a lot to lose.

Fintech everywhere 🏎

And the change is accelerating. In the coming years, financial services will no longer be distributed by banks but instead will be embedded natively within non-financial products. Shopify Balance already offers sellers bank accounts and cards. Acorns lets people invest spare change by rounding up purchases.

The trend is growing extremely fast, driven by open protocols and APIs which are enabling a new generation of software platforms.

Lightyear Capital estimates that embedded finance revenue will grow to $230 billion by 2025 (+60%/yr)

New technology enablers

Finally, new technology layers are creating opportunities to innovate. Open banking and PSD2 allow startups to compete with billion-dollar banks, which are losing their monopoly on customer data. In a space where the power has been centralized by giants, crypto brings new models to securely store and transfer information and value. And AI is enabling users to supercharge the way they make financial decisions.