6 Threats to Growth for Fintechs Without an Offshore Presence

The fintech sector is booming, and the industry will nearly triple in size by 2030, reaching USD $1.5 trillion.

And with the sector’s growth, many fintech providers will have their opportunity to carve off a lucrative slice of a growing pie.

But success and growth are no guarantees without sound, cost-efficient practices.

Many fintech companies, especially smaller startups, will greatly limit their own potential and expose themselves to increased risk if they don’t have an offshore presence or partner.

Below are some of the risks they face.

6 Risks & Limitations for Fintechs without Offshore Presence

1. Higher Costs

For many fintechs, being in developed markets and close to major financial centers like New York, London, Singapore, or Hong Kong offers several advantages, but having a presence in these locations is undeniably expensive.

This isn’t to say not to be there, but spreading out some of the resources and activities offshore can deliver significant cost savings.

Development and non-client facing activities are just some of the areas that can be done by offshore partners and extensions of your team.

2. Limited Talent Options

Fintech providers will miss out if they have no geographic flexibility in their talent acquisition.

Plus, high costs locally will make it hard to hire enough quantity and quality talent to effectively do the job you need them to do.

But by casting the net offshore to hire global talent, there are increased likelihoods to acquire the talent in more cost-friendly ways.

3. Innovation Stagnation

High costs and paying onshore staff to work on certain activities like development, implementations, QA, and regression testing could drain time and resources, surely limiting a fintech provider’s capacity, creativity, and ability to innovate.

Those aforementioned activities could be done at a lower cost offshore, while innovation and strategy can be set up by the onshore teams in collaboration with their offshore counterparts.

In these ways, fintech providers get the most out of their resources, focusing on innovation once again.

4. Missed Expansion Opportunities

Missed growth is not just because of inefficiently used onshore resources, constrained by high costs and limited talent.

And it’s not just about having offshore teams and partners in development.

For fintechs, it’s also about accessing a global market. Not having an offshore presence means limited opportunities to expand their international reach, leaving substantial revenue on the table, ripe and ready for the picking by hungry competitors.

5. Over-Exposure to a Single Market

Tying in to lack of global market presence, over-reliance on one market makes fintechs more susceptible to economic fluctuations, pressure from intense domestic competition, and regulatory shifts.

Naturally, building an offshore/global clientele mitigates a lot of this risk.

6. Limited Servicing Capacity

Speed is everything in the world of fintech, and the companies that develop better, get products to market and service clients faster are the ones likely to win.

And if fintech providers want to maintain an operational advantage over competitors, they need to leverage offshore resources for 24/7, round-the-clock productivity and support.

Especially if they want to serve a global clientele, fintechs will need overseas support teams to keep up with the growth.

But again, not having an offshore presence severely hampers these aspirations.

Partner with Empaxis for Fintech Offshore Presence and Global Growth

By this point, it’s obvious what the risks and limitations to growth are without an offshore presence.

Even if they know the benefits of being offshore, many tech providers lack the means and understanding to effectively set up overseas operations themselves and grow in markets they have less experience or familiarity with.

And that’s why fintech providers partner with Empaxis.

We not only have fully functioning and proven successful teams in cost-friendly locales (providing support in software and application development, QA testing, migrations, and implementations), we leverage AI and RPA tools to ensure greater accuracy and efficiency in our processes.

Additionally, our global presence and team of experts can provide 24/7 servicing, maintaining continuous and uninterrupted progress.

Blog: Learn more about Build-Operate-Transfer (BOT) Model with Empaxis

Offshore a Proven Solution

While expanding offshore requires careful planning and execution, the potential rewards for fintechs are immense.

But don’t let a domestic-only mindset for talent and market share limit growth and innovation potential.

The global market is ripe for opportunity, and fintech providers (in partnership with Empaxis) can position themselves to take full advantage.

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