Due diligence in FinTech, Do you know what to check?


Chime, Coinbase, IZettle, MetroBank, Barion all are fintech companies…if carry out due diligence, do you know what to check?

One key element is technology. Understand the fintech company business model is certainly important because the technology platform use can be unfamiliar for most of us. And the success of the product is linked to the technology. So, take your time to understand what the product is they offer (does the company has technology patented or intellectual property rights?), how the operation goes (and this includes any technology related to the company: hardware and software), and what kind of workforce is needed for it. Beyond documentation, understand how the operation flows within the company.

Another key element is to evaluate security (access, data protection, backup, contingency plans, etc.) and compliance issues. Is the company complying with all the regulations? It isn’t about the fine, it’s the reputation and image of the company at risk. By the way, speaking with people who have worked in the company plus checking references, and news will help identify any potential red flags or risks.

Of course, you need to check the finances. After knowing the operation, it can be easier to understand the numbers. Some aspects to consider: the current market, the position of the company within the market, the competition, the suppliers, the customer satisfaction, and the potential growth the company has.

Due diligence in FinTech is not a “one size fits all” checklist. It should be customized to each company. And the conclusion should be: what is good in the company, what should be improved and the risks the company is vulnerable to. Now, you have a general idea of what to check.

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