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Scratching the surface of FinTech

It’s time for me to give an update on what I have been up to lately. I was lucky and had the opportunity to take a break from my daily work and take a look at a few market opportunities in FinTech.

Already during 2014 and 2015 I tried out some new concepts related to trading stocks, mainly TradingDrill and some ideas related to sentiment and alternative data. We launched a low-fidelity MVP to test initial demand and how the channel to reach customers worked. Thereafter we continued doing customer development and interviewed everyone who signed up and could be reached. Unfortunately, we learned that the business model was not profitable and the customer acquisition costs were quite high.

We turned a few stones and investigated some related ideas which came up during the customer development process. Ultimately the interest faded away. Regular work had the highest priority and almost required our 24/7 attention. So the ideas were put on hold sometime late 2015.

At a startup event, a few months ago, I happened to meet Petri Asunmaa. He was pitching his idea about a tool to help stock investors. We started discussing after the event and eventually decided to join forces and figure out what could be done. This time it was about investing and not trading. There was huge potential in the field.

We started doing customer development almost by the book. So far during this process we have interviewed about 100 potential customers, banks, brokers and various players in the industry. Petri’s blog post summarizes quite well our findings. We also pivoted our concept a few times, starting from a tool for non-professional “do it yourself” investors to a wealth management solution. We gained a significant understanding of the business and how customers really behave and the reality is quite surprising.

Additionally, we learned a lot about the difficulties of FinTech startups entering the market. Typical Lean Startup methodologies are difficult to execute and they need minor adjustments due to the nature of the field. Partnerships and integrations with existing big players take a very long time, not to mention the regulation and applying for all necessary licenses. You cannot just one morning decide you want to test if customers are interested in buying stocks through you and deploy your MVP code in the afternoon, measure and learn. No, you need a different approach in this business.

I will write a separate blog post about lessons learned about customer development in wealth management and FinTech. The biggest takeaway is probably that one needs to take a bigger leap of faith than in other software businesses. This usually comes in the form of bigger initial investments as well as larger and slower MVPs.

During the process, many other good ideas came up. Some related to trading or wealth management, others related to disruptions in the industry, like PSD-2. We are now working at a better plan how to move forward with a few smaller leaps of faith instead of a gigantic one.

We are interested to continue discussing with other companies within wealth management and see if we could find ways to validate our ideas more easily and do something together. Both with new startups and existing players.

PHOTO EDITED FROM WIKIMEDIA COMMONS USER MORITZ WICKENDORF