Navigating the Risks of Open Banking: How to Conduct Commercial Due Diligence for a Fintech
A commercial due diligence report for a fintech company in the open banking space should generally include the following sections:
Executive Summary: A summary of the key findings and recommendations of the report.
Company Overview: A description of the company, including its products and services, target market, and competitive landscape.
Market Analysis: An analysis of the open banking market, including trends, drivers, and challenges.
Customer Analysis: An analysis of the company's customers, including their size, demographics, and geographic distribution.
Revenue and Financial Analysis: An analysis of the company's revenue and financial performance, including its revenue streams, profitability, and growth prospects.
SWOT Analysis: A strengths, weaknesses, opportunities, and threats analysis of the company.
Risks and Mitigants: An analysis of the risks faced by the company, including regulatory, financial, and operational risks, and the measures taken by the company to mitigate these risks.
Recommendations: Recommendations for how the company can address identified risks and optimize its growth prospects.
To ensure that the risk assessment in the report is accurate, it is important to gather and analyze a wide range of data and information about the company and the market. This may include financial statements, market research reports, customer surveys, and interviews with industry experts.
A risk matrix can be a useful tool for visually presenting and analyzing the risks faced by the company. A risk matrix typically consists of a grid with the likelihood of a risk occurring on one axis and the potential impact of the risk on the other axis. Risks can be plotted on the grid based on their likelihood and potential impact, and the resulting risk profile can be used to prioritize risk management efforts.
Take a look at our due diligence report for DAPI, an open banking startup in the Middle East here.