Don't Start a Fintech Startup

Don’t Start a Fintech Startup

This article is originally from, acquired by Window in December 2021.

Fintech is hot right now — to the point where many service providers seek to position themselves as fintechs to enjoy the buzz.

But for aspiring entrepreneurs, it is one of the worst spaces to play in.

Compared to consumer internet or B2B SaaS, fintech businesses are hard to scale and difficult to sell.

Here are our top reasons not to do a fintech startup.

Getting customers is challenging.

Customer acquisition in fintech is more difficult than in other sectors.

This is true on both the consumer and B2B side.

Consumers are more hesitant to hand over bank info and social security numbers to a random startup than to try an app they can subscribe to with Apple or Android.

There’s a reason why major banks pay new customers to open checking accounts: getting that sort of business is hard.

On the B2B side, sales cycles are longer than in other sectors. This makes it hard to get feedback, get revenue, and make product changes.

Fintech startups don’t scale easily.

While there are fintechs that have become large businesses, their market share is almost always tiny.

While PayPal succeeded by owning the eBay power-sellers vertical, the market share of the P2P lending platforms (Prosper, Lending Club, etc.) is tiny compared to the major banks.

The much-hyped roboadvisors, like Wealthfront and Betterment, do not fare much better. Their combined assets are tiny when compared to any major financial institution.

These startups are engaged in incremental innovation, developing process improvements. But they are not disrupting an industry.

Fintech businesses are hard to sell.

Although there is much interest in fintech among founders, investors, and the media, there is relatively little M&A activity when compared to other verticals.

This is because these businesses are still commoditized. Not even Wealthfront or Betterment have built brands strong enough to prevent price-shopping.

Fintech Drift Team

Fintech Drift Team

Acquired by Window in December 2021, Fintech Drift was a media property that helped professionals stay ahead of tech innovations shaping the global financial markets.

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