Founding a fintech is weird because you can do everything “right” in product and still lose. Not because the model is worse, or the UI is clunky, but because the system around you has rules. The rails you run on have regulators, audits, banks, and enterprise buyers who care far more about proof than promises.
For this piece, we spoke with two people who have lived the hard parts up close, from different angles. Sudhanshu Dubey is an enterprise solutions architect and delivery manager at Errna who has seen what breaks when fintech teams scale too fast. Dan Ahmadi is the co-founder of Upside.tech and has had to fight the distribution and operating-model battle that most founders underestimate.
They agreed on something simple. Fintechs do not fail only because they cannot build. They fail because they cannot prove, distribute, and sustain.
A useful way to think about it is that every fintech is building two products at once. The customer-facing product is the one you demo. The “proof product” is the one that shows where money went, why a decision happened, and what controls were in place when it did. Regulators and enterprise customers care a lot about that second product. As firms scale, expectations around auditability, reporting, and operational controls tend to rise fast, and they usually rise at the worst possible time, when the business is already under pressure to grow.
That was the backdrop for Mr. Dubey’s point: teams often underestimate how quickly “move fast” turns into “cannot explain what happened.” Then the company hits a wall during audits, regulator engagement, or due diligence.
In order to succeed in FinTech startups at scale, it is crucially important for the organization to build their technology base for auditability from the very first line of code written. When you put your company’s technology building blocks together for decades prior, your architecture serves as your primary line of defense from a regulatory perspective. Due to prioritizing UI/UX in order to find product/market fit, many founders use the motto “move fast and break things” to refer to the technology they build, but, in fact, the audit trail can easily be broken by using this approach. Our organization consistently observes that when teams discover that their original ledger was not based upon immutable data from day one, they can hit a wall from there on out. It is exponentially more costly to retroactively add compliance into an organization while it is scaling, as is to build in compliance from the very beginning of building technology.
For the majority of organizations, the solid bottleneck to growth will not be in the code, but with data lineage. If an organization cannot readily provide definitive proof of how a transaction has positively moved through their organization for many years into the future, growth (scaling) can quickly become a liability. In addition, I have observed many start-up organizations experience due diligence stalls because they could not produce the reporting level of granularity to meet what was needed by regulators due to their “agile” back-end technology systems.
FinTech start-ups are truly a marathon run by navigating through a minefield. While they (founders) may become very focused on the excitement from developing their product, the successful founders in FinTech ultimately respect the constraints of the system upon which they work, in addition to the needs of their customer.
- Sudhanshu Dubey, Delivery Manager, Enterprise Solutions Architect, Errna
Ahmadi’s take starts one step earlier. He argues that many fintechs overrate product superiority and underrate distribution. In regulated markets, access is the real prize: getting into channels, earning trust, surviving long sales cycles, and displacing incumbents who are already embedded in procurement processes and customer habits.
He also stressed that data architecture compounds. If you accept high-volume, sensitive, multi-source data from day one and your reporting is an afterthought, you end up paying for that decision for years. It becomes harder to answer basic questions about risk, unit economics, and customer behaviour, because the internal picture is blurry.
Finance or fintech founders, what do you wish you had known at the time of founding your company?
The first is that distribution is the true moat. A lot of fintechs start with the assumption that a better model, more intelligent underwriting or more sophisticated analytics will prevail on its own. In fact, the toughest thing is not to create the product. It’s winning access to customers in a category defined by regulation, long sales cycles and incumbents well-entrenched. I just wish I had realized sooner that go to market strategy has to be architected almost as carefully as the product itself.
Next, data architecture builds on itself fast. In the case of fintech, nasty multi source high vol sensitive data from day one. And if your data model is wishy-washy, or your reporting’s an afterthought, it will become impossible to answer rudimentary questions about risk, unit economics and customer behavior. It’s expensive to retrofit clarity into your systems later. Building for observability early builds leverage that most founders underestimate.
Third, the future is in so much as compliance and security are different growth functions when compared to only legal requirements. For founders, doing regulatory work can feel like a drag on speed. The truth is that good governance can drive enterprise trust and reduce time to purchase. When you work in financial services, trust is currency. Compliance-as-brand companies will generally scale more predictably.
Finally, I wish I had more fully understood how long cycles can warp internal thinking. In fintech, revenue recognition, risk exposure and customer lifetime value could stretch across many months or years. The time lag can generate pressure to chase short term measures. In other words, the founders who last are those who create an operating model based on long term signal instead of short term noise.
- Dan Ahmadi, Co-founder, Upside.tech
Taken together, they are pointing to a single operating principle: in fintech, “proof” and “distribution” are not side quests. They are the business.
If you are building in embedded finance or selling into enterprises, the bar is even higher. Partners are taking risk when they distribute your product to their customers, so they will push hard on governance, security, reporting, and the ability to explain decisions. Strong compliance is not only defence. It can be a go-to-market advantage because it reduces friction in procurement, risk reviews, and partner onboarding.
So what should a founder (or early team) do early?
Start with your ledger and your evidence. Design audit logs, records, and reconciliation paths as foundational infrastructure, not “later work.” When you are asked for historical transaction detail, the cost of producing it should be boring, not heroic.
Treat compliance and security like growth functions. Trust reduces time to purchase. Clear controls and strong reporting can speed up approvals, increase partner confidence, and lower the chance of painful rework mid-scale.
Then architect distribution as carefully as the product. Map your channels, pick a motion that matches your regulatory posture, and assume sales cycles will be long. Build an operating cadence that rewards long-term signal, not week-to-week noise, because the lag between action and outcome in fintech is real.
That is the quiet truth both Dubey and Ahmadi landed on. The winners are not the teams who build fastest. They are the teams who can prove what happened, earn access to customers, and keep their internal reality clean as they scale.