7 mistakes every fintech startup makes (and how to avoid them)

The development of the fintech market is still a hot topic in the financial industry, and there are no signs that it’ll change anytime soon, especially looking at the numbers in this industry. The fintech market is estimated to reach over USD 266.9 billion by 2027.
What are the challenges for novice fintech, and what mistakes should they refrain from to avoid business failure?


1. Insufficient financing time

Quite a lot has already been said about the importance of ensuring financial liquidity at the initial stage of fintech development, and it’s not worth repeating it here. The issue of obtaining financing is one thing, but ensuring that this support is sufficient to exceed the break-even point is a completely different problem.

We’re observing the market of beginner fintech, and we’ve noticed that such entities too often underestimate the time – and thus the costs – of their activity in the period preceding their product launch. As a result, they’re left without funds halfway, with an unfinished product, massive marketing expenditure needed, recurring operating costs, and an idea that could work if only the complexity of the topic and financing were better understood at the start of the venture.


2. An overly simplified approach to the issue of technology

Let me tell a little anecdote here. We once started talks with a potential client, who was planning a financial activity. He had a business plan ready, an idea for a simple product, and marketing. However, to our question, “How do you want to collect and process data about your customers’ transactions?” he replied in a very serious tone: “It will be done with Excel”. It took a while for the client to realize that Excel wouldn’t work here.

After all, it’s all about money and financial data, and people don’t entrust these to partners they don’t trust.

This may be a very extreme example, but it clearly illustrates how fintech start-ups treat the back office of their product – as an addition to the beautiful “packaging” of the front-end application offered. Meanwhile, what works “in the back room” is not an addition, but rather a core of the entire undertaking. Therefore, when deciding to develop a financial product, you should first and foremost take care of the technological layer that will process data and transactions in an efficient, comprehensive, and regulatorily compliant way. Why do we need a great-looking application for modern payments, if it turns out that due to technical “flaws” and “holes“, it doesn’t meet customer expectations and doesn’t inspire trust?
After all, it’s all about money and financial data, and people don’t entrust these to partners they don’t trust.


3. Lack of MVP

This is also a strong trend that I see when working with startups in the fintech industry. Young companies want to offer the maximum benefits of their product in the shortest possible time. However, from a business perspective, and especially in an uncertain startup environment, sometimes “less is more“, which is why creating an MVP is so important.

The minimum viable product (MVP) is a working product with minimum functionality, allowing you to test the profitability of a given project on the target group. It’s worth using this solution because it allows you to verify the business model at a very early stage of the business and in the worst case to avoid losing a huge amount of money, which would undoubtedly happen if you decided to release the full solution.

Often, a fintech customer prefers to use services in a narrow range, gaining trust in a new entity, to start using new functionalities over time. In such a situation, starting by launching a narrow range of services, but well-thought-out and reliably operating may be the optimal solution for a newly established business.


4. “We do what others do” approach

If I got a dollar for every time I hear, “It works for them, so we’ll do the same”, I’d be a millionaire. Blindly following your competition and duplicating what already exists has little to do with innovation, and more with following the path of the least resistance.

What’s more, this approach generates a lot of risks, as fintech business models differ significantly from each other, which requires a lot of flexibility both in terms of product creation, and communication issues or target group.

And it’s precisely this flexibility that fintechs lack; instead of following their own path, choosing solutions that are seemingly proven, but incompatible with the specifics of their own business. The effect of such actions is very easy to predict and, unfortunately, not very positive. Fintechs should win against banks with their innovation, courage, and willingness to take greater risks that banks can’t afford. Following the “proven” model will be only a copy, requiring building an advantage through even lower prices or even greater marketing expenditure.

5. Excessive focus on ostensible innovation

If we’d check which phrases dominate the communication of modern fintech start-ups, we’d find there such words as blockchain, cryptocurrencies, machine learning, etc. It seems that today it’s almost impossible to offer a modern solution that doesn’t incorporate these technologies. It’s worse, however, when they only serve as “catchwords” with purely marketing significance, and don’t add any value to the product. Unfortunately, such tendencies are observed increasingly often, and in the end, if these solutions aren’t used properly, it simply doesn’t pay off.

The thing is that sometimes it’s better to use slightly more traditional technologies that realistically and safely respond to product requirements than to expose yourself to the risk of technical errors resulting from the implementation of unproven and relatively low-value solutions solely for the sake of poorly following market trends.

The thing is that sometimes it’s better to use slightly more traditional technologies that realistically and safely respond to product requirements than to expose yourself to the risk of technical errors resulting from the implementation of unproven and relatively low-value solutions (…)


6. Non-compliance of the product with the applicable regulations

The regulations governing the financial industry seem to be one of the most underrated aspects of fintechs’ activities. It turns out that meeting the requirements of financial supervision and obtaining a license (approval) to start financial activities is considered by many existing entities as the most difficult and time-consuming task at the beginning of the adventure in the fintech industry.

Meanwhile, beginner fintechs fall into the trap of poorly adjusting a product or service to the regulatory environment in which they operate. In the end, the planned functionalities, which were supposed to be the distinguishing feature of the service, can’t be implemented in the selected form, because they’re inconsistent with the standards, recommendations, or relevant regulatory practices. This entails several consequences, ranging from the extended time of starting a business and potential financial losses, to the reconstruction of the business model.


7. Poor selection of a technology partner

The creators of fintechs are most often visionaries, businessmen, and non-technical people. Unfortunately, this makes it easier for them to fall into the trap of choosing the wrong technology provider because they’re simply not able to properly verify the company. Of course, in an ideal world, this wouldn’t be a problem – after all, a technological partner should try to respond to the client’s needs as well as possible, and act as an advisor. However, if it were so, I wouldn’t have to so often put my head in my hands in conversations with clients and ask, “Who ruined it for you?”

Unfortunately, the technological layer of the solution is the basis of a good financial product, as I mentioned above. Picking a supplier that not only doesn’t meet the product assumptions but also creates a technological debt – which translates into the operation of applications and services – in addition to frustration generates only losses. It ends up being a waste of time, money, and trust, without which it’s difficult to build a good business relationship.

This is why I’d advise you to not treat this topic neglectfully. It’s worth asking, checking, verifying, and comparing, even if it takes a long time. From the fintech perspective, it will still “cost” less than a quick, but problematic and wrong choice.



Piotr Hanusiak is the CEO of INCAT Sp. z o.o. Prior to INCAT, Piotr was General Director of Delivery and a Member of the Management Board at Innovation Technology Group SA –a company focused on integrating IT solutions for multiple sectors; banking, utilities, and general business. Before joining ITG, Piotr performed managerial roles in the banking division at Sygnity S.A. – one of the largest tech companies involved in software production.

Piotr has extensive experience in project portfolio management, software project management, and IT Strategy. Piotr has graduated in education faculties in the field of Commercial Banking, Market Policy, and Marketing Management.

Contact an author: piotr.hanusiak@incat.com.pl 

Core banking software list for 2022

9 top core banking solutions you should know

The banking industry is a sector of the economy, that, in recent years, has experienced very dynamic digitization processes, which were additionally strengthened and accelerated by the COVID19 pandemic. However, this is not surprising. A recent report released by Ernst & Young showed that almost 50% of banks did not modernize outdated IT systems as quickly as they should have, and almost 43% of American banks still used COBOL – a programming language developed in 1959! Fortunately, providers of more and more modern core banking solutions, created in almost all corners of the world, come to the rescue. 

The definition of core banking

A back-end system that processes banking transactions throughout a bank’s multiple branches is known as core banking. Deposit, loan, and payment processing are all parts of such a system. In addition floating new accounts, servicing loans, calculating interest, processing deposits and transactions, and customer relationship management activities are all essential fundamental banking services in this type of system.

Core banking systems are designed to give existing and potential customers more control over their account activity. Thanks to technological advancements, transactions have become safer, faster, and less demanding. Core banking systems have been a critical feature of banking in recent years because these transactions can be completed remotely from anywhere on the planet.

Core banking solutions may reduce operational costs significantly, resulting in fewer work requirements for execution. They also allow customers to be more accountable. In addition, core banking systems are more user- friendly and efficient thanks to software application-based platforms. The advantages of core banking systems are numerous, including keeping up with a rapidly changing market, streamlining banking operations and making them more straightforward for customers, and expanding a bank’s reach to remote locations.



Born in the cloud

According to Gartner- by the end of 2023, public and private cloud will each account for 5% of commercial off-the-shelf (COTS) core banking installations for an overall 10% of the COTS market. New core banking software platforms are built on cloud and digital technologies and use open API-based architecture to better interface with various internal and external services and systems.

Lower costs, faster time-to-market and more superficial connections with multiple services that may improve customer experiences are all advantages of new core banking systems. However, developing core banking software in-house is a complicated and time-consuming process that can overwhelm teams and delay product launches. Many well-known fintech brands have outsourced their core banking software from fintech providers.

Below, we present nine of the most interesting IT solutions on the market that are worth considering when choosing a modern and technologically advanced transaction system for your financial business.

Core banking software list for 2022

1. Mambu – SaaS cloud banking platform

Launched in 2011, Mambu is a software-as-a-service, cloud-native, API-driven banking engine provider that powers lending and deposit services. The company enables financial institutions of all sizes to design, launch, service, and scale their banking and lending portfolio. It empowers over 7,000 loan and deposit products which serve over eight million end customers, with more than three million active accounts in over 46 countries, ranging from fintech to traditional banks. Mambu’s historical customer base includes microfinance institutions and fintechs. However, Mambu currently focuses on larger banks launching spinoffs or migrating. Its installation base is spread mainly across Western Europe, Latin America, and sub-Saharan Africa. The country with the most installations is the U.K.

2. Thought Machine – foundation of modern banking

Thought Machine is a fintech company that builds cloud-native technology to revolutionize core banking. Its mission is to solve one of the banking industry's primary problems: its reliance on outdated IT infrastructure. Nearly all banks are stuck on a legacy IT platform, which cripples their ability to innovate and give their customers the type of service they deserve.

The company provides a solution to this: Vault - a complete retail banking platform that's capable of being configured easily to suit the needs of any bank. They've built Vault from the ground up as a cloud-native, microservice API architecture platform. Thought Machine has a deep culture of engineering excellence, and they believe it's this that delivers a solution compelling enough to engender a seismic shift in the banking industry.


3. BOS by INCAT– bringing the digital revolution to banking

Founded in 2018 BOS is a fully flexible, cloud-native, and composable transaction system dedicated to fintech start-ups and neo/challenger banks. BOS has been created by INCAT – a fast-growing tech company that wants to empower companies to bring the digital revolution to finance and banking.

The BOS system is perceived as one of the most flexible banking software on the market, and is a first-choice solution for companies looking for quick implementation, reasonable costs, and easy integration with external systems. BOS is cloud-native, API-driven, and based on microservices software solution. It has been built from scratch to operate securely and efficiently in the cloud, but it can also be installed in any computing center (private cloud, on-premises).

BOS system is perceived as one of the most flexible banking software on the market

BOS' functionality is designed according to the Business Lines- concept (BOS Core, Payments, Savings, Lending, General Ledger) and is tailored to the customer's business ideas and goals. The system is available as a licensed solution with implementation and maintenance support, as well as a subscription model based on license rental with maintenance support, preceded by implementation of the system (low entry cost threshold). BOS is also a sharia-compliant core banking software. It allows its customers to run any financial products in compliance with Islamic law. The software is used by next-gen international fintech brands all around the world (Belgium, Saudi Arabia, Lithuania, Poland, Hungary etc.).


4. Temenos - a digital core-banking solution you can bank on

Temenos Group AG is a market-leading provider of banking software systems to retail, corporate, universal, private, Islamic, microfinance and community banks.

Headquartered in Geneva with 68 offices worldwide, Temenos serves over 1,000 financial institutions in more than 125 countries across the world. It was founded in 1993 in Geneva, Switzerland. From the outset, it had a simple mission: to rid the banking industry of its legacy software.

Ever since then, Temenos has worked to make this mission a reality. It has invested more than USD1bn in developing great banking solutions. It has grown its product set from core banking to payments, wealth management, business analytics and channels, offering a comprehensive set of solutions to meet the industry’s needs.


5. FIS - the foundation stone of a modern banking platform

FIS is an American multinational Fortune 500 corporation that offers a wide range of financial products and services.

FIS is best known for its development of Financial Technology - FinTech - and as of Q2 2020, it offers its solutions in three primary segments: Merchant Solutions, Banking Solutions, and Capital Market Solutions. FIS focuses on retail and institutional banking, payments, asset and wealth management, risk and compliance, and outsourcing solutions. It serves more than 20,000 clients in over 130 countries.


6. Oracle Flexcube - Core Banking Made for Tomorrow

FLEXCUBE is an automated universal core banking software developed and introduced by Oracle Financial Services. This solution is designed for financial organizations and banks. It offers customer-centric core banking functionalities. It ensures a holistic view of all customers and enhanced communication between bank employees and consumers.

Due to FLEXCUBE’s opensource environment and multiple API management, its users can create their business logic and interfaces, as well as integrate the system with third-party applications. This international core banking system is compliant with various regulations and suitable for any bank in over 115 countries.


7. Finastra – the future of banking

Formed in 2017 by the merger of Misys and D+H, Finastra provides a broad portfolio of financial services, spanning across retail banking, transaction banking, lending, and treasury and capital markets. The solution enables customers to deploy mission-critical technology on-premises or in the cloud. Finastra is an open and reliable solution that allows customers to accelerate growth, optimize costs and mitigate risk. Forty-eight of the world’s top fifty banks use Finastra technology.


8. nCino - by bankers for bankers

Launched in 2012, nCino offers a cloud-based bank operating system created by bankers for bankers. The system helps increase profitability, productivity gains, regulatory compliance, and operational transparency at all organizational levels as well as across all lines of business.

Following a process structure similar to a bank’s loan accounting system, this bank operating system offers combined services through its business process management, loan lifecycle, business intelligence, and document management solutions.


9. Backbase - re-design your bank around the customer

Backbase was founded in 2003 and provides all the building blocks banks need to fast- track the implementation of their next-generation digital banking vision. The platform enables banks to create and manage seamless customer experiences across any device that's directly integrated with any back-end system. Superior digital experiences are essential to staying relevant to consumers, and Backbase enables financial companies to rapidly grow their digital business.

More than 150 banks and credit unions around the world have standardized the Backbase platform to streamline their omnichannel/digital operations, including ABN AMRO, Barclays, CheBanca!, Credit Suisse, Deutsche Bank, Fidelity, Hapoalim, HDFC, KeyBank, NBAD, OTP, PZU, PostFinance, Societe Generale, and Westpac.


As we can see in the above list, there are more and more solutions that can respond to increasingly demanding fintech companies.

However, it's worth looking for a solution that in addition to its technologically advanced architecture, is able to flexibly adapt to all of our needs and enable a quick launch of any financial product.

INCAT FaaS AI as a trading platform for one of Saudi Arabia's first digital banks

Our client is one of the leading Arab banks which, in order to fully digitize its services, creates one of the first digital cloud banks in Saudi Arabia. The implementation of the FaaS AI fintech service allows the launch of a commercial offer for future digital bank customers. In this project, INCAT acts as a technology partner and supplier of the main transaction system and project teams as part of the IT outsourcing service.

What is INCAT FaaS AI?

INCAT FaaS AI is a trading platform that acts as a sandbox for beginner fintechs, challenger banks and digital banks. The platform in the form of a service enables efficient implementation of all processes necessary to launch financial services. The implementation does not require the client's environment, because the platform enables the installation of a full range of cloud services.

You can read more on INCAT https://incat.com.pl/faas-ai/


What were the client's needs?

Until now, strict financial laws in Saudi Arabia did not allow the creation of digital financial services, installed in the cloud. Only recently, the new legislation provides space for full digitization of banking. The client, in order to be able to offer his solution on the commercial market and become a pioneer in the field of modern financial services, needed a transactional solution that would allow for a very fast implementation process, significantly shortened compared to standard implementations of this type. The use of INCAT FaaS AI functionality seemed to be the optimal solution in this approach, addressing the client's requirements: the need for efficient implementation of a commercial product, compliance with restrictive formal requirements set by local regulators, the need to market verification of a new business model on the Saudi Arabian financial market and cost optimization related to the use of system resources.

The client did not have a specialized technical team that would be able to carry out such a technologically advanced implementation, which is why we, as a technical partner, also had the obligation to provide independent and competent IT teams that would take up this challenge.


The role of INCAT FaaS AI

In this project, INCAT's FaaS AI components, installed in the public cloud, cover customer and account processing, as well as card transaction and payment processing. For the FaaS AI implementation itself, we used our skilled implementation and development team.


The biggest challenge

The biggest challenge while working on the project proved to be the limitations of the local financial system, which imposes high requirements for compliance with internal legislation and restricts the ability to provide key services from outside Saudi Arabia. INCAT as a system provider, processing clients' financial data, has to meet a number of conditions, resulting from the regulation of Saudi Arabia's financial law. In addition, our approach was important: technological flexibility (cloud agnostic), flexibility of Incat's business models, and the ability to adapt to remote and pandemic project implementation system.

  • Functionalities that we implemented in the project
  • Data processing of customers and their accounts
  • Managing financial processes and products
  • Processing of money transfers and card payments
  • Installation of the solution in the public cloud


Thanks to the efficient implementation of INCAT FaaS AI components, the client is preparing for the commercial MVP implementation of its solution, which is planned for Q3 2021.