Preparing for a fintech IPO

Four foundational keys to success

We’re in the midst of a fintech IPO boom. Available money in the capital markets comes as fintech’s offerings are as in-demand as ever. But success as a public company depends on more than good tech. It requires that companies embrace the “fin” in “fintech” and apply their knack for innovation to navigating financial services requirements.

Fintech IPOs: Four foundational keys to success

It’s a fascinating time for fintech. The virtual-first environment we’re experiencing globally has accelerated the adoption of many of the industry’s innovations, including digital banking, online point-of-sale financing, contactless payments, and enhanced digital offerings across fintech companies, such as proptech and insurtech. Meanwhile, a significant amount of money is up for grabs in the capital markets, and there’s a widespread push for public listings as venture capitalists look to find successful exit strategies for stars in their portfolio.

These trends have led more and more fintech companies to consider pursuing a public listing via an initial public offering (IPO), special-purpose acquisition company (SPAC), or a direct listing (DL). This public listing boom is solidifying a shift in the way financial products and services are delivered and underscoring fintech’s arrival on the main stage as a viable long-term business model. It’s being led by companies pursuing stand-alone end-to-end business models and/or partnership models with traditional financial services organizations.

Of course, a fintech IPO, SPAC, or DL demands rock-solid financial and operating processes and practices—table stakes for any company looking to go public. What may distinguish the most successful public fintech companies from their peers is a willingness and ability to embrace the “fin” in “fintech”—that is, to treat several key capabilities specific to financial services delivery not as a series of boxes to be checked, but as potential areas of innovation and competitive advantage.

Your company’s growth was likely due to your tech-focused approach to culture, speed to innovation, and customer experience. These characteristics attracted the investors and devoted users who fueled your growth as a private company. Your tech is the foundation of your organization and essential to your success. Your approach to the financial services–specific aspects of your business ahead of, and after, your public listing can either amplify that success or negate it; even some of the world’s largest fintech companies and financial institutions have paid big (sometimes literally) for not prioritizing key aspects of their governance and oversight.

Building out proactive and innovative approaches to navigating requirements for financial services organizations can be a competitive advantage for your fintech. These approaches can make your company an attractive business partner for larger organizations and enable scalable growth. It is therefore advisable to invest in these areas in advance of your public offering.

How can you embrace the “fin” in “fintech”? Let’s explore four important focus areas.

The time is right. Is your fintech ready?

Fintech’s innovative financial products and services have become increasingly relevant during the COVID-19 era. Pair that demand with the overall boom in companies going public, and you have a setting that’s ripe for a fintech IPO, SPAC, or DL. But success requires more than a favorable environment. It also requires embracing the "fin."

When you become a public fintech, regulation and compliance can overshadow your technology story if they are not thoughtfully and effectively executed. Internal controls and corporate governance become an important part of how potential shareholders and regulators will evaluate your company’s ability to grow. Approach these aspects of your business as opportunities for innovation and differentiation from day one as a public company, and you’ll likely gain a competitive advantage over those fintech peers that overlook and underestimate the importance of these challenges, as well as less agile incumbent financial services organizations.

Your public awaits.

Covering your bases: What every public listing requires

Embracing the “fin” in “fintech” is about turning several key aspects of a public financial services organization from boxes to be checked into areas for differentiation. But those don’t capture all of the work that needs to be done ahead of a public listing. Every company, regardless of industry, needs to meet a challenging list of requirements to go public.

Financial and SEC reporting: Financial reporting, monthly close, investor relations, finance systems infrastructure, technical accounting, registration statement, ongoing reporting capabilities

Systems, process, and controls: Control environment, capacity and capabilities, strategic improvements, scalability, monitoring certification, control testing and remediation

Human capital: Clean-slate review, new incentive plans, implementation and communication, disclosure, process and governance, benefits

Tax: Tax structure; tax compliance; ongoing compliance, governance, and reporting; tax function; tax operations

Corporate governance: Governance structure, board and management committees, internal audit charter and infrastructure, disclosures, ongoing close and reporting optimization, risk management capabilities

Investor relations: Listing preferences; roadshow preparation; disclosure policy and regulation FD; stand-up investor relations team and infrastructure; market intelligence; earnings release, investor inquiries, and presentation

Start navigating the roadmap to your IPO and learn more about how Deloitte can help.

Helping your fintech’s public listing become a success

Is your fintech considering an IPO, SPAC, or DL in the near future? Deloitte can help you address the long-term business imperative of embracing the “fin” in “fintech” beginning on day one. Let’s start a conversation about turning your compliance, capital, risk, and governance into the areas of innovation and competitive advantage they need to be.

Sandeep Gupta
Audit & Assurance Partner
Deloitte & Touche LLP

Kirby Rattenbury
Audit & Assurance Partner
Deloitte & Touche LLP

Matthew Block
Audit & Assurance Senior Manager
Deloitte & Touche LLP

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The services described herein are illustrative in nature and are intended to demonstrate our experience and capabilities in these areas; however, due to independence restrictions that may apply to audit clients (including affiliates) of Deloitte & Touche LLP, we may be unable to provide certain services based on individual facts and circumstances.

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