Voice of the Industry

Niche fintech services for business – are they the future?

Wednesday 20 July 2022 08:26 CET | Editor: Claudia Pincovski | Voice of the industry

As the ‘one size fits all’ approach becomes a thing of the past, Nik Zimarkov, the CEO of Karta.io, explains why fintech companies should focus on customer-centricity and simplicity.

Solutions for creators. Corporate credit cards. Customised loans. Tech-driven bank services for companies have been flooding in recent years. In the wake of a global pandemic, everyone can get a solution tailored to their needs – thanks to niche fintechs. Now, with everything digital and increasingly automated, this transition is apparent.

Businesses saw the fusty banking establishment as ripe for disruption and took advantage of the opening by creating niche products. But it was more than just a desire to adapt to a changing reality that prompted businesses to go niche – banks weren't changing fast enough to keep up with new consumer needs.

The traditional mindset was broken

As a big bank, you have to play a scale game. They learned it in business schoolbooks, but that should be unlearned. Banks conquer vast market segments to cover their high development costs, targeting segments based on wealth and the mass market. Big players go after big players. Reputation, heritage, and trust always led the way traditional banks operate, and the thought of competition was not even allowed. The technology they used was proprietary and primarily analogue.

With the financial crisis of 2007-08 and the resulting bank bailouts and regulatory changes, everything started to change, and a new ecosystem evolved. Blockchain technology, coupled with the ever-increasing number of mobile phones with internet access, has provided the perfect space for fintech ventures to thrive.

Niche fintech is the new disruptor

Crammed with venture capital funding, thousands of fintech came into being, all competing to fill the vacuum left by banks in payments and lending. Despite PayPal's success as a payment processor in 2018, other fintech companies found it difficult to compete with traditional banking services because they lacked the underlying banking infrastructure.

Yet, the pandemic took its step. Online business and ecommerce are rapidly growing, remote services and digital are a new normal – companies have been hunting for underserved customers. The new reality has spurred interest to invest in B2B fintech, as businesses demand flexible solutions for their specific needs.

New fintech startups have begun to target the business sector. Their knowledge and infrastructure from the consumer world allowed them to address the more complex needs of businesses. In contrast with the ‘one size fits all’ approach of the past, these new startups started to tailor solutions to specific markets, transitioning into Fintech-as-a-Service (FaaS).

And they still grow as digital technologies continuing to remodel payment, management, credit, insurance, and other financing methods. The ability of niche services to adapt to specific sectors makes them highly sought after. According to IndustryARC, FaaS services will reach USD 161 billion worldwide by 2026.

Understanding customers' needs and struggles

Fintech startups broke into the banking business and carved out various niches: credit card refinancing, small business loans, B2B payments, and more. Big banks became the Walmart of financial offerings, while fintech platforms became specialty eco shops. So, why is that?

Niche fintech companies focus on customer-centricity and simplicity, as well as the freedom to build solutions without the burden of legacy systems. Their sophisticated data collection and analysis also allow these companies to develop better solutions. Niche services get an in-depth understanding of business needs and identify their struggles. Teams wade through physical receipts before inputting data into Excel, waiting for reimbursements. Advertising managers need many cards to scale on campaigns. Business owners want to know exactly where their money goes – and niche fintech services make that possible. If you know your customers, you can cover their needs and succeed. And that's huge.

Traditional banks are trying to acquire third-party technology. Although they have the resources for in-house development, they can't match the speed of fintech startups. Niche fintech is developing rapidly, and customer experience (CX) is at its heart. It focuses on a single centralised tech stack, so there's more room to prioritise customer experience while reducing the need to invest in backend infrastructure.

Niche fintech services for business

What are their niches?

Today's fintech services take place in lots of niches. In recent years, investments hunted for enterprise industry, payments, and digital lending. Wealth management has also seen some changes. The core is that today's niche fintech services target specific industries like marketing or ecommerce, as the adoption of digital payment methods drives them. Stacking funds is crucial, and you will also have to allocate your funds wisely in other important spending areas like accounting, development, and advertising. Fully integrated software is what these markets demand.

Some industries seek flexible spending solutions because their growth is skyrocketing. Affiliate marketing and ecommerce are one of them. The bank account isn't enough. They need many cards to control spending before it happens and get more seamless team management. And today's solutions can cover all this. For example, Karta serves these markets with huge benefits: businesses can create cards for any use cases, set limits, divide expenses by teams or projects, tie cards to a specific vendor, track expenses in real-time, and many more. It's made to stop the manual burden and restart finance management on ‘easy mode’.

Emerging niches in the fintech industry

The market for fintech solutions is snowballing. Fintech offerings for SMEs may be in the spotlight, but large multinational companies benefit from these solutions. The pandemic has accelerated digital transformation within companies. However, it takes time for these changes to occur, especially when a company is large and entrenched in traditional business models. Yet, multi-currency flexibility has the potential to save such companies significant sums of money.

Ecommerce is still a road to explore too. Recent years have seen a direct-to-consumer rise, a game changer that elevates distribution and customer service. It's only a matter of time before others catch on. According to eMarketer, ‘US digital D2C sales are expected to reach USD 175 billion by 2023’. These companies benefit from intimate customer relationships because they have access to and complete control over user data.

Using digital channels, they deliver a better customer experience that scales. And niche fintech companies attacking high banking fees and complex financing can make a huge deal. These services offer many features, including a way to divide teams and their expenses and tie cards to vendors to control spending and advertise on a large scale. Niche fintech and direct-to-consumer approach match perfectly, making corporate spending seamless.

The future of fintech is niche

The future is now. In some areas, the big banks still reign. They will focus on the super-rich while the rest find their niche. Opportunity for innovation is rife across the financial services sector. New entrants can access businesses directly. They can innovate at a pace and scale that is impossible for larger lenders. And this is only the start.

There is still plenty of room to grow, as many businesses have yet to adopt niche solutions. A bunch of services is already implementing cryptocurrency and blockchain technology into their offerings, paving the way for more innovative financial solutions.

What is the niche fintech of tomorrow? We wish we knew, so we could all make gains on the stock market. But we can guess anyway: it's profoundly personalised and omnichannel, more ‘tech’ than ‘fin’. Meaning artificial intelligence, data science, cloud computing, and APIs will no longer be luxuries, but necessities. And now, the industry realises this is a full marathon, not a sprint.

About Nik Zimarkov

Nik ZmarkovNik is the CEO of Karta.io, a software for collaborative business finances. Nik has vast international experience in the fintech market. In 2013, he started SWIPE (app) as a co-founder. Nik was the owner of one of Europe's leading performance marketing agencies, OffersHub. While at an advertising agency, Nik encountered automation problems in the finance sector. He was craving for simplicity, allowing businesses to focus on growth instead. In January 2021, Nik Zimarkov launched Karta.io as its CEO. Nik is a venture capital investor and crypto expert. Field of interests: financial technologies, digital currencies, apps.

About Karta.io

Karta is a simplified spending solution, all-in-one control center of safe delegation with expense transparency based on company rules for employees, teams, and projects. It shifts business mindset from complex manual workflow to a seamless automated experience, fundamentally changing the way companies manage their funds. We create financial solutions for companies and help them implement technology into their workflow.

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Keywords: fintech, credit card, banks, COVID-19, regulation, blockchain, payments , startup, B2B payments, data
Categories: Banking & Fintech
Companies: Karta.io
Countries: World
This article is part of category

Banking & Fintech


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