Scaling into a multinational titan of the fintech market is the dream of many of the young industry’s founders when they start off — but the path to get there can be long and arduous.
Even in the seemingly fast-paced world of cryptocurrencies, the teams that are built for and maintained over the long haul will likely be the ones to prevail during periods of uncertainty and fluctuating economic cycles.
To help shed light on the state of fintech industry growth and their respective experiences in the international marketplace, Converge hosted Hong Fang, President of OKX crypto exchange, and Nicola Ebmeyer, co-founder and CEO of Gain.pro, a private market intelligence firm, to discuss the rise of their respective companies into the international marketplace.
Navigating market tailwinds
The global fintech market is projected to grow significantly, driven by trends like open banking, digital currency and increasing access to fintech solutions worldwide.
Even amid these projections of serious fintech sector growth, however, market realities can stand in the way of success.
Interest rates have made it more expensive to borrow and raise funds. Still, an uptick in transactions could indicate that the market is bottoming out, especially in sectors such as energy and materials. Financial institutions are increasingly integrating modern technologies to enhance their services and streamline operations, contributing to this trend.
“We do see positive signals,” Ebmeyer says. “Deal volume is higher than it was in 2023 and also higher than it was pre-pandemic.”
She predicts that rates could come down a bit in the second half of the year, opening the door for companies to deploy some of their “dry powder” or go public after tabling an IPO.
This resurgence in activity may fuel more advancements in digital cross-border payments. Digital payments, such as mobile wallets and contactless payments, are integral to modern banking, enhancing customer onboarding and supporting fintech companies’ efforts to innovate and meet market demands.
Deciding when to expand to emerging markets
Ebmeyer encourages fintech founders to consider their global ambitions and the role of digital financial services in the infancy of their entrepreneurial journeys.
“For [Gain.pro], it was always clear that we wanted to become a global leader in our space,” Ebmeyer says. “I think, generally speaking, it’s an important question every founder should ask him or herself: What kind of business do I want to build, and what kind of business model does my industry require?”
Once that vision is solidified, you can build your culture around a global mindset — even if you’re starting out in a local or regional market.
Key personnel should share that mindset, and the talent acquisition strategy should take future expansion into account. It’s much easier to build for tomorrow than to build for today and start all over again once it becomes time to expand, Ebmeyer said.
Emerging markets, particularly in Africa, Asia-Pacific and Latin America, are critical areas for growth in the fintech industry, contributing significantly to projected revenue increases.
“The language is one thing, but it’s also about culture, talent, the features that you develop because if you don’t put this global setup into place within the first couple of months or years of the business, it’s really difficult,” Ebmeyer says. “If you have been, let’s say, a Dutch player for 5 to 10 years, and then you want to go international, that’s challenging.”
The value of slowing down for fintech companies
As the world economy continues to grind out a multiyear period of inflation and high interest rates, many solid business models are failing for many reasons.
For some, it could be due to regulatory hurdles that exist separately from country to country, market to market. Fang notes, though, that it’s often due to founders trying to build too big, too fast.
“People think they could become rich and build a big company overnight, but it actually takes years and years of hard work,” Fang says. “The way to the top is not going to be a straight line. There will be ups and downs, and only if you’re willing to commit to the long-term care for your people, then you can also achieve something really big. And it’s actually very rewarding if you build something that has sustainability, that has a base; that is what feels rewarding at the end of the day.”
Think globally, invest locally
Fang references her recent expansion into the Netherlands as the result of a concerted effort to visit the country, forge relationships and learn the culture. This understanding of a new market informs how the product is designed with regard to payment structures, trading platforms, online and mobile banking, and other amenities.
Ebmaeyer adds that fintech founders should be hands-on while expanding into new markets instead of relying on their business development team. That’s because it’s critical to set the right tone and possibly even challenge new clients with something they don’t yet know about to position them for future success.
Financial technology companies can play a significant role in spurring local market expansion with the right approach, however.
“I think the founder needs to be ready to spend significant time in a new market and sell the first subscriptions [or] products him or herself. So we always say at Gain.pro, the first 10 clients we need in a new segment or in a new market, we need to sign ourselves, and only then we hand the process over to our commercial team,” Ebmeyer says.
“I think if you want to be an innovative player in the space, you should also already think a step ahead, and this is what we are always trying to do.”
Prioritize trust and growth together
International businesses are increasingly moving their cross-border payments “on-chain,” and it’s critical to establish confidence in the financial sector for it to spread and succeed.
Negative headlines or bureaucratic obstacles have eroded some of this confidence. As much as standardization and clarity from governments would help, Fang believes it’s also largely up to the fintech industry to overcome such challenges proactively with its own guardrails and transparency. While traditional financial institutions may benefit from name recognition, fintechs have a unique opportunity to forge strong customer relationships through transparency.
“Our proof of reserve program, which is done monthly, provides that clarity to our customers,” Fang says. “On the other hand, we also believe that a forward-looking and reasonable-minded regulatory framework and regulatory clarity are critical and important for the industry to continue to evolve and innovate and reach mainstream.”
Want more insights on the topics shaping the future of cross-border payments? Tune in to Converge, with new episodes every Wednesday.
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*The information shared on this blog is for informational purposes only and should not be considered financial advice. Please note that the opinions expressed on Converge are solely the opinions of the host and the guests, not Convera’s.