To start or not to start fintech during recession?
Microsoft, IBM, HP, Disney, FedEx, 3M. What do these companies have in common? They started their business during a recession.
The idea to start a business during economic turmoil might seem scary. But should it be? Not necessarily. Especially if you’re thinking about taking an already existing fintech company and bring it to your own country. Then, the weaker economy may become an advantage that can help you to come out on top. Here‘s why.
The upside of the downturn
Recessions create many problems: the rise of unemployment, a decrease in purchasing power, and general economic uncertainty. While such economic conditions create headwinds for some businesses, others experience tailwinds. For example, during an economic downturn, wage costs do not rise as fast as the economy grows.
Kostas Noreika, the main shareholder of the international payment solutions provider Paysera, notes:
“The COVID-19 outbreak pressed the brakes for many companies but at the same time speed up the adoption of e-commerce and global digital payments at a pace we have never seen before during our 16 years of operations“. He also uses this period to invite financially-minded entrepreneurs to join the Paysera Network to adapt ready-made payment solutions locally.
People want to save money
Let’s agree that the opportunity to save is a hot commodity during economic turmoil. When the economy is growing, people do not like to save. Instead of saving, they like to spend the money they earn, and saving habits are best formed when the economy is starting to slow down. So it’s a good time to offer things like cheaper remittances or just an app to manage and save money.
Fewer new competitors
There are fewer people trying to launch a business in a downturn because many are petrified with fear. On the contrary, when the economy is in good shape, everybody wants to grow their market share or establish a startup. Remember that one step forward means that you are first when everyone else is at a standstill.
No groundbreaking ideas?
As mentioned before, launching a business does not necessarily mean that you have to start from scratch or have a never-before-seen idea. It is easier to launch a business with a shortcut that can quickly put you in the fast lane. Fintechs that have already started their business search for local partners or agents that are able to skyrocket their business locally under a franchise or other partnership agreement.
“Cultural and geographical attributes are considered to be important factors in forming financial habits. Geography shapes customer behaviour, therefore we believe that a wisely chosen partner can be a key factor in the development of our payment solutions abroad” says Kostas Noreika of Paysera, which by partnering with banks and finance institutions around the globe is able to offer cheap and convenient payment gateway services with easy integration.
The Paysera network abroad is expanding on a joint-action basis through local partners. Recently have granted an Electronic Money Licence (EMI) in Kosovo, Paysera plans to expand to other Balkan states in the coming years as well, and is also looking for partners in Turkey, South America, other countries.