You raised $1.5 million. Eighteen months later, you’re out of runway with a half-built product that still can’t process a real transaction. Sound familiar?
According to CB Insights, 38% of startups fail because they run out of cash. In fintech, that number climbs higher because founders consistently underestimate one thing: compliance isn’t optional, and it’s expensive.
Here’s what nobody tells you about building fintech products. The technical complexity isn’t the hard part. Stripe, Plaid, and dozens of banking-as-a-service providers have abstracted away most of the heavy lifting.
The hard part is making smart resource allocation decisions when every choice feels urgent and your board is asking about launch timelines.
This guide covers how to build a fintech MVP that actually works without watching your bank account hit zero.
Start With Regulatory Reality, Not Feature Dreams
Most founders sketch features first and think about compliance later. That’s backwards.
Before you write a single line of code, answer these questions: What licenses do you need? Which regulations apply? Who’s your compliance counsel?
If you’re handling payments, you’re looking at PCI-DSS compliance. Money transmission? State-by-state licensing that can cost $50,000 to $500,000 and take 12 to 18 months. Investment products? SEC registration and potentially FINRA membership.
Robinhood learned this the hard way. In 2020, FINRA fined them $70 million for systemic supervisory failures and customer harm.
The company had scaled faster than its compliance infrastructure could support. They had the engineering talent and the user growth, but their compliance function couldn’t keep pace. The result was a fine that made headlines and damaged user trust at a critical moment.
Your MVP scope should be defined by what you can legally and compliantly ship, not by what your product team dreams up in a whiteboard session.
The compliance landscape varies dramatically based on what you’re building. A simple expense management tool has different requirements than a lending platform or a cryptocurrency exchange. Understanding these distinctions early prevents costly pivots later.
- Payment processing apps need PCI-DSS compliance at minimum. If you’re holding funds, you may need money transmitter licenses in each state where you operate.
- Lending platforms face Truth in Lending Act requirements, state usury laws, and fair lending regulations. If you’re using alternative data for underwriting, you’ll need to prove your models don’t discriminate.
- Investment tools trigger SEC and FINRA oversight. Even robo-advisors with simple portfolios need to register as investment advisors.
- Practical step: Book a two-hour session with a fintech-specialized attorney before you hire a single developer. Budget $2,000 to $5,000 for this conversation. It will save you $200,000 in pivots later. Come prepared with a clear description of your product, your target market, and how money flows through your system.
The “One Thing” Rule for Fintech MVPs
Chime didn’t launch with savings accounts, credit builder cards, and early direct deposit. They launched with a simple checking account and a debit card. That’s it.
Your MVP should do one thing exceptionally well. Not three things adequately. Not five things poorly.
Here’s a framework for deciding what that one thing should be:
- Question 1: What’s the single most painful problem your target user faces?
- Question 2: Can you solve 80% of that problem with 20% of your imagined feature set?
- Question 3: Will solving this problem generate enough signal to prove or disprove your core hypothesis?
If you’re building a B2B payments platform, maybe your MVP is just invoice generation and ACH transfers. Skip the dashboards, the analytics, the multi-currency support. Those are Series A problems.
Dave, the banking app that helps users avoid overdrafts, started with exactly one feature: small cash advances to cover users until payday.
They validated demand with that single offering before expanding into banking, budgeting, and side hustle matching.
Their initial product was almost embarrassingly simple compared to their eventual platform. But that simplicity let them prove the core hypothesis fast: people would pay a small fee to avoid $35 overdraft charges.
The temptation to add “just one more feature” is constant. Resist it. Every feature you add increases development time, testing requirements, compliance surface area, and potential points of failure. A focused MVP ships faster, costs less, and generates clearer signal about what customers actually want.
Consider how your one thing maps to your eventual business model. If you’re planning to monetize through interchange fees, your MVP needs to process enough transactions to validate unit economics. If you’re charging subscription fees, your MVP needs to deliver enough value that users will pay monthly.
The challenge is that most founding teams lack the specialized expertise to build compliant fintech products quickly.
That’s why many successful startups partner with custom fintech software development services that understand both the technical and regulatory requirements from day one. The right partner helps you ship your one thing faster without cutting corners on compliance.
Build vs. Buy: Where to Spend Your Engineering Hours
Your developers should spend time on what makes you different. Everything else should be bought, rented, or integrated.
This is where most fintech founders get resource allocation wrong. They hire expensive engineers and then waste those engineers’ time rebuilding infrastructure that already exists.
Buy these (don’t build):
- Payment processing: Stripe, Adyen, or Checkout.com
- Banking infrastructure: Unit, Treasury Prime, or Synapse
- Identity verification: Plaid, Persona, or Jumio
- Fraud detection: Sardine, Unit21, or Sift
- Card issuing: Marqeta, Lithic, or Galileo
Build these (your competitive moat):
- Your core algorithm or underwriting logic
- The specific user experience that differentiates you
- Proprietary data models or risk assessments
- Custom workflows that define your product
Mercury, the startup banking platform, didn’t build their own core banking system. They partnered with Evolve Bank & Trust and focused their engineering resources on the experience layer that makes their product feel different from traditional business banking.
Their competitive advantage isn’t the underlying banking infrastructure. It’s the clean interface, the fast onboarding, and the features designed specifically for startups.
Every hour your team spends building commodity infrastructure is an hour not spent on what makes customers choose you over alternatives.
The economics here are straightforward. A banking-as-a-service provider like Unit charges basis points on transaction volume plus monthly platform fees. For an early-stage startup, that might total $5,000 to $20,000 per month.
Building equivalent infrastructure in-house requires a team of specialists and 12 to 18 months of development time. The buy decision isn’t even close for most MVP scenarios.
That said, some startups eventually bring infrastructure in-house as they scale. Stripe famously built much of their own infrastructure.
But they did that after proving product-market fit, raising significant capital, and hiring world-class engineers. Your MVP phase is not the time for that level of investment.
Choosing Development Partners Without Getting Burned
Here’s an uncomfortable truth: most fintech startups can’t and shouldn’t build entirely in-house for their MVP.
Senior engineers with fintech experience command $200,000 to $350,000 in total compensation. You need at least three to five of them for a real product. That’s $1 million or more annually in engineering costs alone, before you’ve shipped anything.
Red flags when evaluating development partners:
- They can’t name specific compliance frameworks they’ve worked with
- No references from companies in your specific fintech vertical
- Fixed-bid pricing with vague scope definitions
- They promise everything and push back on nothing
- No questions about your regulatory strategy or compliance requirements
Green flags:
- They ask hard questions about your regulatory strategy
- Case studies with measurable outcomes
- Clear communication about what’s in and out of scope
- Experience with your specific tech stack and integration partners
- References you can actually call and ask detailed questions
Budget 15 to 20 hours for due diligence before signing any contract over $50,000. Call references. Ask about projects that went wrong and how the team handled them. Request to speak with engineers who would work on your project, not just sales representatives.
The best development partners will push back on your ideas. They’ll tell you when your timeline is unrealistic, when your feature scope is too broad, or when your compliance approach has gaps. If a vendor agrees with everything you say, that’s a warning sign.
Realistic Budgeting for a Fintech MVP
Forget the “build an MVP for $50K” advice. That works for consumer social apps. Fintech is different.
Here’s a realistic breakdown for a payments or neobanking MVP:
- Legal and compliance: $30,000 to $75,000
- Development: $150,000 to $400,000
- Third-party services (year one): $50,000 to $150,000
- Security and compliance certifications: $25,000 to $100,000
- Buffer (you will need this): 20% of total
That puts a realistic fintech MVP in the $350,000 to $900,000 range. If you raised a $1.5 million seed round, your MVP should consume 30 to 50% of that capital, leaving runway for iteration, customer acquisition, and the inevitable surprises.
Successful fintech companies typically raise $2 to $3 million in seed funding precisely because the compliance and infrastructure costs create a higher floor than other software verticals.
What Derails Fintech MVPs (And How to Avoid It)?
Mistake #1: Premature scaling of engineering teams
You don’t need 15 engineers to build an MVP. You need 3 to 5 good ones who understand fintech. Larger teams create coordination overhead, slower decisions, and higher burn rates.
The ideal MVP team includes a technical lead with fintech experience, one or two backend engineers, a frontend developer, and access to design resources. That’s it. You can scale the team after you’ve validated your core hypothesis.
Mistake #2: Underestimating compliance timelines
Bank partnerships take 3 to 6 months to finalize. Money transmitter licenses take 12 to 18 months in some states. SOC 2 Type II requires a 6-month observation period. Build these timelines into your planning from day one.
The compliance timeline often becomes the critical path for your launch. Start these processes as early as possible, even before your product is fully scoped. You can always adjust your product plans, but you can’t accelerate regulatory approvals.
Mistake #3: Building for imaginary scale
You don’t need infrastructure that handles 10 million transactions per day when you have 47 users. Optimize for learning speed, not theoretical throughput. You can re-architect later when you have real scaling problems and real revenue to fund solutions.
Early-stage fintech products should be slightly over-provisioned for reliability, but wildly over-engineering for scale is a waste of money.
Mistake #4: Ignoring unit economics
Every fintech transaction has a cost: payment processing fees, compliance overhead, fraud losses, customer support. If your business model doesn’t work at the unit level, more volume just means losing money faster.
Before you launch, model your unit economics carefully. Know your cost per transaction, your expected fraud rate, your customer acquisition cost, and your projected lifetime value. If the math doesn’t work at small scale, it won’t magically improve at large scale.
The Launch Checklist
Before you put real money and real customer data into your system:
- Penetration test completed by qualified third party
- Compliance policies documented and reviewed by counsel
- Incident response plan written and tested
- Banking partner integration fully tested with real transactions
- Customer support workflows defined and tested
- Monitoring and alerting configured for all critical paths
- Data backup and recovery tested
- Terms of service and privacy policy reviewed by legal
- Error handling tested for all failure scenarios
- Fraud monitoring rules in place
Skip any of these and you’re gambling with your company and your customers’ money.
Moving Forward
Building a fintech MVP is expensive and complicated. There’s no way around that reality.
But the founders who succeed share three traits: they ruthlessly prioritize the one feature that matters most, they treat compliance as a product requirement rather than a legal afterthought, and they allocate capital to buy speed where it makes sense while building defensibility where it counts.
Your seed round is a finite resource. Spend it on the things that prove your hypothesis and get you to the next milestone. Everything else can wait.
The startups that make it through the MVP phase and into growth aren’t the ones with the most features or the most sophisticated technology.
They’re the ones that shipped something focused, learned from real users, and preserved enough runway to iterate.
Keep your scope narrow, your compliance tight, and your burn rate sustainable. That’s how you build a fintech company that lasts.
