Kaushik Subramanian: How to Find Promising Fintech Startup Ideas

The way to get good fintech startup ideas? Not to try to think of good fintech startup ideas. My advice to entrepreneurs is to look for money problems rather than money solutions.

Most aspiring founders start by naming a sector. Payments. Capital markets. The office of the CFO. Then they go hunting for a product to build. In my experience, that’s backward. Starting from a sector is how you end up building a slightly worse version of something that already exists, because you’ve inherited the same map everyone else is looking at. The sector might tell you where to look, but it doesn’t tell you what to build.

Instead, start with the money and look at how it moves.

Money flows through a business. It comes in, it moves around, it goes out – and at every step someone records it, checks it, approves it, or carries it from one system to another. Wherever that movement slows, it’s a stong signal of friction. Perhaps it is a person re-keying numbers from one screen to another; or a reconciliation that runs once a day because that’s when someone has time; or two or more pieces of software that were never built to talk, with a human sitting in the gap between them.

If you want to find fintech startup ideas, follow the money until it hits a bottleneck – and then look hard at why it stopped.

Fintech startup tests

So far, so good. But sadly that’s not the end of the story. Not every bottleneck is a business.

The next stage is where I often see founders flounder. A point of friction is only worth building a company around if it passes two tests.

Test No. 1: Is a fix possible?

Can the tools we have today solve the problem you’ve identified? Three things have to be true:

• The work has to be a repeatable, automatable workflow, rather than a string of one-off judgment calls that look similar from a distance.
• It has to emerge from and throw off data, because without data there is nothing for software to learn from or act on.
• The problem must be contextual, by which I mean it must index on information about how the business actually runs: who hands what to whom, which system feeds which and what has to be true before the next step can happen.

If your problem involves workflow, data and context, you probably have something that is “possible” to solve. Especially where AI can be applied effectively.

Test No. 2: Would it be transformative?

Will solving this problem actually change anything? Will a customer’s business be meaningfully different afterward? Enough cost needs to come out, or enough headcount freed, or enough value delivered that paying you is an easy decision rather than a line-item negotiation.

One strong indicator that a bottleneck clears this bar is that the customer is already spending heavily on it. Perhaps the work is even outsourced. Better still: it’s a large line in the P&L, something the CFO already sees and most likely wants to reduce.

A CFO does not care whether they pay Acme Services or Acme AI. They care that there is a cost on their books – not attached to any of their own headcount – going out the door every month for a job they would rather not think about. Take a real bite out of that number, and you have a buyer. That is a very different starting position from trying to convince someone they have a problem they hadn’t noticed.

Both tests matter. A good fintech idea lives in the overlap, where both answers are yes. Many founders only check one of them.

What this looks like in practice

Let me make these tests more concrete with an example of a company I know well. Stacks makes software that handles the financial close, the monthly process of getting a company’s books right and signed off. Let’s apply both tests to this bottleneck.

Take possible first. The close is a repeatable workflow rather than a series of judgment calls. Doing the close gives you the full financial picture of the company, because you cannot close the books without touching all of its financial data. It also gives you context because you have to understand how every department and every tool feeds the numbers. Thus, here is the workflow, data and context, all sitting inside one task.

Now we come to transformative. The close is something every company does, every month – and almost nobody enjoys it. It eats senior finance time on a fixed cycle that never stops. Take the close off their plate, and you’ve potentially changed how the finance team spends its month.

By solving for the close, Stacks found a fintech idea in the key overlap between possible and transformative.

Finding a bottleneck you can solve

Which brings me to the long-term potential in finding a money bottleneck that is both possible and transformative: it usually points you towards the next bottleneck you can solve.

Once you have solved the close, for example, you are not just sitting on a close tool. You are sitting on the company’s financial data and a working map of how the business runs. That is exactly what you need to solve the next bottleneck in the flow, and the one after that.

This part is worth dwelling on because it is where the value in your fintech idea can compound.

A successful fintech company does not expand by solving one problem and then, one day, deciding to become a platform. You expand because solving one constraint hands you the data and the context to see and reach the next one. The pipes are connected. Clear a blockage in one place, and you can suddenly see further down the line than you could before, and you arrive at the next blockage already holding most of what you need to clear it.

The platform is a consequence of removing friction, not a plan plucked out of thin air.

Follow the money to where it slows and, at each bottleneck, ask the two questions. Can you solve it? Would solving it change the business enough to matter? Where both answers are yes, you have most likely found something worth building, and usually more than one thing, because bottlenecks often sit next to each other along the same flow.

Only then should you worry about the sector.

In my next article, I will walk through a handful of enterprises and apply the principles outlined here. We will look at real sources of friction, real areas where businesses may be able to create value, and where I think you might find compelling fintech startup ideas.

This is the first part of a two-part series on fintech startup ideas. The second part will be available on ThinQ soon.