For fintech startups, simple ideas are best

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

Speedy execution. A diverse founding team that has technical skills, sector expertise and knowledge and not to mention lots of energy. Lots of funding from big-name VC investors. Top tech talent.

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

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

Many of the most successful entrepreneurs and their startups, however, show it is often the simplest ideas that will lead to truly delighting customers. Investors rather like the returns they generate too.

Keep it simple 

For many, perhaps a majority of, people the world of finance, money and banking is overly complex to the point it is largely ignored. Except when people need it the 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 figure out what one is), finance rarely feels ‘easy’. 

That best describes the market for financial products, and its obvious opportunities 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 doing something existing 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 fintech companies privately owned started out just offering an incredibly simple idea.  Normal people were getting ripped off unnecessarily by foreign exchange rates while banks earned fat margins. Revolut brought ‘the market rate’ to the mainstream. Fast forward and the company has c.25 million customers. 

Monzo and Starling too embraced simple problems early on: customers wanted a better digital banking experience with friendly features such as card freezing at the touch of a button. 

Klarna,Zilch and other BNPL providers brought the idea that credit cards are all 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 is crucial to be able to explain your idea clearly and succinctly.

Simple ideas are more likely to resonate with people and be easily understood, which can lead to greater buy-in and enthusiasm.

Simple ideas are often more scalable and easier to execute. 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 founders, product managers, general counsels and others constantly dwelling in the weeds of regulation, legacy infrastructure and other irritants, of course, simple ideas often have complexity embedded deep under the surface. 

Startups that are 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 safeguarding 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.