For fintech startups, simple ideas are best

There are still endless “simple” problems that need to be fixed.

Image source: Pexels

What are the causal determinants of success in the world of fintech startups?

Fast execution. A diverse founding team that has technical skills, sector expertise and knowledge and not to mention a lot of energy. Lots of funding from big VC investors. Top technical talent.

All of these are essential, but in the eternal quest for the perfect product-market fit, there is an increasingly underappreciated value: simplicity.

An all-too-common misconception is the notion that the best ideas are always complex and groundbreaking (I see you crypto).

However, many of the most successful entrepreneurs and their startups show that it is often the simplest ideas that will lead to real customer delight. Investors rather like the returns they generate as well.

Keep it simple

For many, perhaps a majority of people, the world of finance, money and banking is far too complicated to the point of being largely ignored. Except when people need it most.

Whether you’re trying to get a credit card, mortgage or bank account or just trying to figure out how to invest in an ISA (or just figuring out what one is), finances rarely feel ‘easy’.

It best describes the financial products market, and its obvious potential for disruption, ahead of the fintech boom 15 years ago.

How much has changed today? A lot is the answer. But has this original fintech mantra of making something that exists better, cheaper, faster (or all three) persisted?

If you look at some of the most successful companies today, they have embraced complexity but started with simple ideas.

Revolut, one of the world’s most valuable privately held fintech companies started by offering an incredibly simple idea. Normal people were needlessly cheated by exchange rates while the banks made fat margins. Revolut brought the “market rate” to the mainstream. Fast forward and the company has approx. 25 million customers.

Monzo and Starling also embraced simple problems early on: customers wanted a better digital banking experience with friendly features like freezing cards at the touch of a button.

Klarna, Zilch and other BNPL providers brought the idea that credit cards are too often a bad deal.

Probably the biggest advantage of simple ideas is that they are easy to understand and communicate. This is also key to building trust from your customers not to mention regulators and investors and even your own team members.

When pitching your startup, it’s crucial to be able to explain your idea clearly and concisely.

Simple ideas are more likely to appeal to people and be easy to understand, which can lead to greater buy-in and enthusiasm.

Simple ideas are often more scalable and easier to implement. Complex ideas require more research and development, more time and more costs.

Simple ideas can be iterated more quickly and efficiently to improve the overall product or service.

Simple ideas are more adaptable to changes in the market or customer needs.

Now for all the founders, product managers, general counsels, and others who constantly dwell in the weeds of regulation, legacy infrastructure, and other irritants, of course, simple ideas often have complexity embedded deep beneath the surface.

Startups based on a complicated or niche idea may find it difficult to pivot or adjust their strategy when the market inevitably changes.

Complex ideas may only appeal to a small segment of the market, limiting the potential customer base and revenue potential. Simple ideas, on the other hand, can appeal to a wider range of customers and have greater potential for growth.

Simplicity does not guarantee success. But with fintech seemingly here to stay, we need more new startups to take a look at the financial problems still hiding in plain sight 15 years after the Great Financial Crisis.

Perhaps securing startups’ deposits is a good place to start

Simple ideas are often the best foundation for startups. If you’re considering starting a new venture, don’t feel like you need to come up with the next big thing. Sometimes the simplest ideas can be the most successful.