Designing an International FinTech Startup: Challenges and Opportunities

Any entrepreneur (beginner to those who are attracted to the technology ecosystem) who creates and plans to grow their business must, at some point, consider the possibility of internationalization. In fact, development within national borders soon becomes a limit to the growth of the company. Therefore the conquest of new markets is often seen as desirable and even necessary. Therefore it is necessary to keep internationalization in mind from the moment the company is established.

In the age of the Internet, globalization, social networking, distance learning and e-commerce, external factors are more than favorable for the internationalization of companies, especially in digital technology. Differences still exist between national markets, but, especially within the European Union, they present obstacles that can be overcome.
Often the only real obstacles are linguistic (everything has to be translated), regulation (how to implement European directives in each country plus national regulations), and cultural (adapting to each country’s entrepreneurial culture, with business and buying).

“The State of Fintech”: What are its peculiarities?

Many fintech startups are planning to internationalize them by taking models for companies that have certainly succeeded in internationalizing them, but in different sectors. This can be a misleading approach because customers may have radically different needs and purchases from one sector to another.

A company looking for the right fintech solution to simplify its expenses and a company that needs the latest technology to expand into the auto industry, for example, won’t have the same “buyer” approach. and will not (often) have to comply with the same regulations.

Regulatory environment

The European regulatory environment remains too fragmented for fintech companies. Each country has its own supervisory authority, such as the Prudential and Decision Supervisory Authority, acronym ACPR, and Banque de France, in our country, whose task is to supervise the banking and insurance sectors, maintain the stability of the financial system and protect customers.
The challenge is to translate national regulatory requirements into technology suitable for international scope. This step has risks that one will discover along the way.

Internationalization Challenges

During the process of fintech internationalization, it is necessary to evaluate its resources to support the adaptation and evolution of the offer, in accordance with the applicable regulations. This leads to the mobilization of a marketing budget, potential integrations with local partners, and technology adaptation efforts, which will lead to delays in contract negotiation, with unanticipated delays and costs.

Also, startups tend to make another miscalculation, i.e. imagining that their customer acquisition strategy will be the same across all markets. Nothing could be less true in B2B!
In B2B, local management habits die hard, both in terms of management, process, corporate governance and culture. Marketing strategy and dirty Effective in France it will not necessarily be the same in Germany, and so forth. In addition, the market shares that can be dealt with vary greatly depending on the maturity of the entrepreneurship in the country: the sophistication of the product and the ability of its potential customers to understand its benefits will limit its size.

So we must ask ourselves the following question: Are the existing sales and communications channels adapting to the new market in which I am developing my business? In determining the budget for internationalization, it will be necessary to question one’s certainty about what has worked in the domestic market, including the pilot budget. The latter will make it possible to identify more effective national methods and channels than initially envisaged.
Finally, a note should be made about translation into local languages. As with marketing and sales channels, adapting their key messages will also face the translation of concepts into different languages, which may become less effective depending on the country (for example, in Anglo-Saxon countries, the language used is informal and direct, in France it tends to be sustainable, in Italy it should be informal in client interface, but sustainable in communication…)
However, communication in all its forms is of critical importance for fintech companies, as it raises their challenges in lead generation, investor relations, reputation, and visibility. The linguistic aspect hides more rooted cultural mechanisms, which persisted even in the era of globalization.
Therefore, knowing the differences between markets is essential to planning an effective internationalization strategy. It makes it possible to set realistic budgets and brings solidity to the forecasts proposed during the search for capital.

The design of the company at the international level since its inception

Recognizing the risks and challenges of setting up a company makes it possible to anticipate them in the long run. By choosing from the start to create a structure and offer likely to adapt to different national business contexts, having clearly identified the European market as its primary objective, the company builds a competitive advantage over time.
Thus, it is necessary to identify the most frequent and most homogeneous internationally, and then in the second step, to check their usefulness, the conditions for their “in-field” deployment, in each national market.

The organizational aspect is of fundamental importance as it determines the options for developing new jobs and the roadmap for their creation. In addition, it is necessary to bet on human capital: individuals who are experts in their national market, who can enter into relationships with clients and prospects, and advance goals doomed to fail without this cultural understanding.
For all of this, running a startup with international DNA is a daily challenge that requires time and internal resources.

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