Failure is good for you. Do you know what I mean? After all, it is a part of life. Therefore, you should expect to fail. As it is in life, so it is in the fintech start-up world. Many fintech start-ups have emerged and become unicorns. Others have come and left uncelebrated.
Failure is not the exclusive domain of the fintech sector. It is part of human nature. Remember, sometimes fintech start-ups get it wrong. Some get it right. And they have become the market leaders.
On the one hand
Failure is good for you. But do not be discouraged! Failure is part of the process. It can be a great learning experience. Meanwhile, fintech is relatively new, if you compare it with banking. But fintech has refined finance, as we know it.
On the other hand
Research has shown that the fintech industry has witnessed remarkable growth and disruptive innovations. It has revolutionised the way we manage our finances. But behind the success stories, there have been instances of fintech failures that provide valuable lessons for industry players.
Failure is a good factor if you are ready for it. Even for Fintech.
In the long term
A short story. Before the advent of Interswitch, ValuCard was here. As a payment system, it could not integrate with the many technologies the banks were using then. Some of the issues then had to do with the card reader, PoS terminals, ATM, and other transaction processing systems. The stand-out challenge for me was the interoperability conundrum. It could not settle transactions between many banks. Then, if you are using ValuCard, you are on your own. If your bank accepted the card, the next bank would not. It was a huge challenge. Then lack of awareness and more ensured the card could fulfil its promise. It failed.
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Interswitch rode on the wings of the failure of Valucard to fintech greatness. It entered the market and eliminated the interoperability challenge. Through its technology, Postilion, Interswitch connected with the banks’ ATM. Boom. It was like magic. It sounds like a walk in the garden. It was a battle. One company’s failure was another’s triumph.
As it was then, so it is now. Several fintech firms have failed. Many factors have contributed to these failures. Some of these involved inadequate market research, poor product-market fit, regulatory challenges, and scalability issues. Some fintech companies have struggled due to underestimating the complexities of the financial landscape. Others lacked a clear value proposition that resonated with consumers.
Research has shown that several factors can contribute to the failure of fintech companies. Understanding these challenges is crucial for industry players to navigate successfully. Some of the factors listed above can be summarised as one: human error.
Factors such as high operating cost, having a small team, minimal funding, technology misalignment and others, can be linked to human misjudgement. The operating cost did not happen by itself. A leader signed off. The tech mistake did not happen. A leader signed off. A team does not put itself together. A leader did.
One of the main reasons Powa Technologies failed was its high operating costs. The company invested heavily in marketing and expansion efforts without achieving significant customer adoption. This resulted in financial strain and an inability to generate enough revenue to cover its expenses. Other failed fintech firms insisted on developing a proprietary tech instead of leveraging existing infrastructure. They failed. Flutterwave leveraged existing infra before surging forward. These are lessons. Not failed attempts.
In the short term
Failure is a good factor if you are ready for it. Even for Fintech.
*Olaegbe ([email protected])
