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From Concept to Reality With Fintech Solutions: Idea Validation in Financial Services

Technology

Sep 20, 2023 - 6 minute read

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Michał Głógiewicz Technical Architect

Michał is a Technical Architect experienced in turning complex business scenarios into a technical solution. He is a fan of the cloud and uses various technologies tailored to current needs. Outside of working hours, he loves exploring distant countries and cultures. 

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Grzegorz Łoniewski Business Solution Advisor

Grzegorz has been building bespoke business-value driven solutions for over 15 years. He also has extensive research experience, which he gained during his time working in Spain, France, and Poland. He is passionate about leveraging the latest technologies to ensure a competitive business advantage. Throughout his career, he’s had the opportunity to apply his knowledge from having worked on large, multi-sector digital transformation programmes to the financial services industry.

See all Grzegorz's posts

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Table of contents

  1. Methods for Validating an Idea
  2. Validating Ideas in the World of Fintechs
  3. Unlocking the Potential of Hackathons
  4. A Real-Life Example — The Lending Platform Hackathon
  5. Challenge Your Idea 

Navigating the competitive landscape of the financial sector presents a formidable challenge. Amidst numerous established services, validating a new business idea becomes daunting but also crucial for the path to success. In this article, we will explore various validation methods, placing a particular emphasis on harnessing the potential of hackathons.  

Even the most promising idea needs to be validated. It’s not only about assessing its feasibility but also about confirming whether it brings the expected value. Effective validation can guide product refinement, push you towards new directions, or simply help you avoid bad design choices, ultimately saving time and money.

Methods for Validating an Idea

When it comes to validating your business idea and the strategies for its execution, a multitude of approaches exist, each tailored to different levels of complexity and sophistication. The most popular methods include:  

  • Non-Digital Validation  

The simplest manner of validating an idea doesn’t require the creation of any digital artefacts. Even the humblest tools like paper sketches accompanied by a verbal explanation, can yield valuable insights when shared with business stakeholders. This approach extends to validating technical assumptions through market and technical research. 

  • Digital Mock-Ups   

Low-fidelity mock-ups are another way of providing a visual representation of your concept. They can later evolve into high-fidelity versions, offering more details and a sense of user experience. Both iterations can be discussed with business partners or even potential users if you can identify and include them in the process. However, it’s worth noting that while this validation method is valuable, it won’t prove the feasibility of the solution.  

  • Proof of Concept  

Proof of concept serves the role of affirming that the chosen technology and tools are suitable for building the solution. In many cases, multiple proofs of concept may be necessary to validate different aspects of your idea and ensure their feasibility.   

  • Prototyping  

Building a prototype takes your idea one step further, creating a working solution with limited but crucial features and an approximation of the final product’s look and feel. Prototypes offer an ideal platform for collecting valuable user feedback, making them particularly beneficial for start-ups seeking to secure investor support. Still, it’s essential to acknowledge that prototyping can be resource-intensive and costly unless realised using technologies such as low-code frameworks.   

  • Hackathons   

Hackathons provide a unique opportunity to build a working or demo-ready solution that covers at least a portion of your overarching idea. Beyond mere validation, hackathons stimulate teams to tap into their creativity and innovation, potentially leading to new discoveries that surprise and delight business stakeholders. 

While these techniques all serve the purpose of idea validation, they are best suited for different stages of idea development. To maximise the effectiveness of your validation process, it’s recommended to use multiple methods based on your current needs, available time, and resource constraints. 

Validating Ideas in the World of Fintechs

Validating ideas within the financial services sector requires a meticulous approach, particularly in light of the extensive landscape of pre-existing products and services. In this dynamic arena, various factors come into play and must be carefully examined. One of the primary considerations is identifying which components of your vision can be effectively realised in partnership with fintech companies. These fintech innovators offer specialised solutions that cater to nearly every aspect of financial services. Whether you’re looking to integrate core banking functionalities such as accounts, loans, and savings, implement Know Your Customer (KYC) procedures, explore alternative scoring methodologies, streamline money transfers, optimise payment processing, or track money collection, there’s a fintech solution available to address these and other financial services requirements. The critical task at hand is validating the capabilities of these fintech companies, evaluating their pricing structures, and assessing their compatibility for seamless and secure integration within the highly regulated financial sector. 

Unlocking the Potential of Hackathons

Out of the array of validation techniques discussed earlier, hackathons stand out as a versatile approach. They are renowned for driving innovation and sourcing new ideas and solutions  — according to HackerEarth’s research, over 80% of Fortune 100 companies use them for this purpose, but they also shine as a validation method. Furthermore, fintech-focused hackathons rank among the top three prevailing themes within the private sector. Hackathons promote creativity imposing minimal constraints. These constraints typically include a fixed timeframe, limited resources, and a specific area of focus or a hypothesis to validate. Teams participating in hackathons are empowered to shape the solution, select the technology stack, and design the business scenario to demonstrate their results. The outcome of their efforts, in the form of a working prototype, can be presented to a wider audience for further feedback collection.  

Often, hackathons are defined as a contest involving two or more teams and infuse an element of competitiveness that further fuels creativity and innovation. The goal of the teams is to develop a demonstrable solution, with the focus on the idea itself, setting aside concerns about production-like quality or standardisation. This informal and creative approach expedites the solution prototyping process, surpassing the speed of conventional projects. 

In essence, hackathons can be used as a way of validating ideas and visualising concepts for further discussions. By furnishing teams with a hypothesis to validate and granting them the freedom to build, hackathons increase the likelihood of thorough idea validation and foster a culture of innovation.

A Real-Life Example — The Lending Platform Hackathon

At Objectivity, we are eager to use different idea validation methods. Recently, we organised a hackathon event to experiment with idea validation in the financial services area. The hypothesis was defined as follows: “An online lending platform can be built using only third-party off-the-shelf fintech products to realise the value chain".  

Before the main hackathon event, there was a preparatory phase during which multiple fintech solutions were assessed and proposed for teams’ consideration. However, each team could freely decide which fintech solutions to integrate.  

The hackathon unfolded as a competition between two teams, each comprised of four developers. The only constraints imposed were related to time, with a timeline of just four days. One team specialised in Mendix low-code technology, while the other wielded expertise in .NET and Angular, so both solutions could potentially be built with totally different approaches.  

The teams used their time wisely, invested in ideation, planned their work, and efficiently executed their strategies.  As a result, they were able to demonstrate two working lending solutions, each boasting a different approach and distinct look and feel. Both teams succeeded in integrating with fintech solutions for different stages of the process, such as KYC, alternative scoring, and repayments. This achievement validated the hypothesis: building an online lending platform without the need for extensive in-house development is indeed achievable. The hackathon’s dynamic nature coupled with the ample space for shaping solutions made it possible to realise the goal in as little as four days.

Challenge Your Idea 

Validating ideas is crucial as it brings you closer to success and allows you to avoid mistakes at the very beginning. As we’ve explored, there are multiple methods tailored to different stages of idea maturity and solution design.  The financial services sector is very peculiar, with many solutions crafted by piecing together various fintech offerings. Business ideas often find their roots in these third-party services, yet their harmonious co-existence demands validation. Fortunately, the landscape is primed for this task, with well-documented services and publicly available APIs and sandboxes that facilitate seamless integration of fintech solutions for feasibility assessment and idea validation. All these tools and resources streamline the validation process, so don’t waste your time and money. Validate your idea and unlock the door to your success! 

2988 HC Digital Transformation 476X381
Michał Głógiewicz Technical Architect

Michał is a Technical Architect experienced in turning complex business scenarios into a technical solution. He is a fan of the cloud and uses various technologies tailored to current needs. Outside of working hours, he loves exploring distant countries and cultures. 

See all Michał's posts

Grzegorz Łoniewski Business Solution Advisor

Grzegorz has been building bespoke business-value driven solutions for over 15 years. He also has extensive research experience, which he gained during his time working in Spain, France, and Poland. He is passionate about leveraging the latest technologies to ensure a competitive business advantage. Throughout his career, he’s had the opportunity to apply his knowledge from having worked on large, multi-sector digital transformation programmes to the financial services industry.

See all Grzegorz's posts

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