Taking it global: expanding into new markets is often a key success factor to drive growth and secure market leadership. Together with Marqeta we recently evaluated how fintech companies can get their international expansion right.

How to identify the right market entry approach

Over the past years, I’ve rarely seen a pitchdeck without a grand international expansion plan. Once product-market-fit is reached on the home market, most fintech companies quickly try to expand beyond borders to scale their proposition across markets. The European regulator has further opened the door due to the passporting ability of most financial licenses, such as the e-money license. Yet, there are many examples of fintech companies that pulled out of new markets due to missing traction or miscalculated market entries. That’s why we were happy to provide our perspective on how to make global expansion a success during the API Chronicles panel organised by our friends at Marqeta. We were additionally joined by Capital on Tap, Visa as well as Transact Payments.

In our project work with both fintechs and established financial institutions, we follow a structured approach to discover new markets with the biggest growth potential. First, it pays off to get a broad, high-level understanding of potential new markets within the desired expansion zone, such as the EU. Once all potential countries are identified, we further organise and rank them across two key dimensions:

  • How big is this market? This can be a standard TAM/SAM/SOM analysis or a more granular bottom-up approach, depending on the product and target group complexity
  • How complex is it to enter this market? Market entry complexity is very important to take into account in a regulated field like financial services. Hence, this dimension usually covers many factors, such as required regulatory approvals and technicalities (such as KYC), available technical integrations (such as credit bureaus), payment schemes, cultural or political elements, local target group considerations or the competitive landscape, among others.

These two dimension allow to create a preliminary ranking of markets. Subsequently, a specific go-to-market approach can be created, which should take local distribution channels and unique customer needs into account.

During the panel, we discussed the approach described above in detail, plus covered many other topics based on recent projects. For example, Capital on Tap recently expanded into the US market and shared a few insights about how the right tech partners as well as local talent can become a critical element in successful market expansion.

About the author

Adrian Klee, partner at Ross Republic
PARTNER, DIGITAL BANKING

Adrian Klee

Adrian is an expert in building digital business in the financial services sector. He has a background in Fintech and Consulting, and specialises in market research, digital service development and lean venture building.

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