Fintech, fintech, fintech.
Its easy to enter this burgeoning space – but how does one stay relevant and profitable in it?
Joe Giunta, Founding Partner at New Bridge Consulting Group spoke with Traders Magazines Editor John DAntona Jr. to discuss what fintech firms should focus on, the risks and pitfalls facing new entrants. Giunta is an operations, technology, risk management, cybersecurity and business transformation expert across industries, with a strong record leading business, operational and tech teams. He has developed result driven teams, new products and services that have contributed to the bottom line of the worlds largest and most recognized global financial institutions. Prior to NBCG, Giunta was Senior Vice President and the Deputy Head of the Operations and Technology Division at Fannie Mae.
Traders Magazine: What are the operational dos and donts for fintech companies?
Joe Giunta: As more fintech start-ups go to market with a good product and better mousetrap, we often don’t hear much about what it means to be operationally ready.
TM: Can you explain what a new company needs from an operations and infrastructure standpoint?
Guinta: The company needs to have stress tested its product and insured the product is performance ready. With this in mind, organizations can have a thorough understanding of the resiliency of their infrastructure and have recovery plans in place in the event of a failure in order to mitigate client disruption.
TM: What are some key risks and controls needed at launch?
Giunta: To the extent you are being evaluated for third party potential risk, you should be evaluating the vendors you leverage to deliver capabilities to your client. Its important that you have performed a thorough assessment of the vendor including its controls, management practices and fiscal health. Remember any difficulties one of your service providers experiences could potentially expose you to financial, reputational and regulatory risk.
TM: How important is expense management to a new organization’s philosophy early stage?
Giunta: For an early stage company with uncertain revenue streams, they should be diligently managing their cash burn through strategic expense management. Similarly, as the company matures it needs to evolve its expense management program into an active capability.
For example, understanding CAC (Cost to Acquire a Client) against revenue streams.
TM: What are some of the most common mistakes or “don’ts” newly funded companies make?
Guinta: Many of the common mistakes of a company depend on, amongst other things, the stage of the company (Seed, Pre-Product, Post-Product, Pre-Revenue, or Post-Revenue). For example, an early stage companys founder may have a host of responsibilities including that of a CFO/COO/CRO/CMO. As the company matures, the CEO needs to review its management structure, consider hiring talent such as functional experts that can help build out capabilities in an efficient and resilient manner, and delegate tasks accordingly. Given budget constraints, organizations should consider outside “contractor” consultants to fill functional C-suite roles in cases that they may not be able to hire initially.
TM: So, what are the top three essentials “dos” for new start-up companies?
Giunta: Be very specific in identifying the market pain point you are solving for. Talk to your potential clients from a business perspective and not as a technologist. Understand the sales cycle of your product to your target market – for example, selling to enterprises is a long process with many different stakeholders. Learn who is the champion, decision maker, and understand the firms third party vendor risk process.