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When failure is not an option, what sets some fintechs apart from crowd?

17 May, 2021Helene Panzarino

Covid has accelerated the move to digital across all sectors, but particularly in banking and finance. The pandemic challenged all financial services – payments, lending, identity, etc  creating a make-or-break moment for fintech. So what made the fintechs who thrived different to those that failed? Helene Panzarino looks at five characteristics that make a difference.

Digital identityAt its finest, fintech sets out to make finance cheaper, simpler, more transparent and overwhelmingly customer centric. The whole idea is to use the tech of the day to meet the financial needs of the people who use it.

Sounds simple? In principle it is, but making a fintech succeed, particularly during unprecedented times, is not that easy.

So what key ingredients does a fintech need?

Is your proposition genuinely disruptive?

The most successful fintechs solve old and persistent problems in an innovative way. It’s simply not enough to bolt a mobile app on to online banking.

Consider the surge of stimulus loan applications during the recent crisis as an example. What came to the rescue of thousands of small businesses?

Alternative lenders who could offer a great user experience by using  open banking to make access to data quicker and easier. These fintechs were able to get funds into clients’ business accounts in record time.

Can you make a positive impact on your customers’ lives?

The customer may not always be right. But in fintech – as with any other successful business – the customer should always come first.

Everything you do should be about making customers’ lives easier. And that cuts across every aspect of the business – from the product to marketing and how you respond if things go wrong.

A good indicator of whether you’ve got this right is you ‘net promoter score’. In other words – are your customers recommending you to friends and family?

Are there enough potential customers to see your fintech continue to scale?

Are you meeting mass demand for a product or service? Or is it a niche segment you're serving?

Niche and community are super-hot at the moment. But if your customer segment is niche, it needs to fall into the category of ‘niche is the new mainstream’ – meaning there’s a significant market share.

Can you persuade investors to fund your business?

Do others believe in your idea – your passion and your technology – to the point that they are prepared to fund your game-changing vision?

You might think that the pandemic would have driven venture capitalists to invest in any and all digital solutions, but that’s not the case. Put yourself in their shoes – if they’re going to take a risk, they need to be sure it’s a risk worth taking.

 In 2020, large, later-stage and follow-on rounds were the flavour of the year. Not completely ignoring the early-stage fintechs, there was a move to introduce funding in the form of convertible loans and new early-stage equity funds.

How agile is your fintech?

The last year or so has been like no other. When crisis hits or the way we live suddenly changes, are you and your business able to adapt? Will you be able to pivot to a new business model and a new way of serving your customers?

Good examples from the last year include:

  • a forex fintech that pivots to multicurrency shopping on e-commerce marketplaces
  • an online lender that shifts from B2C to B2B2C – enabling contextual finance where previously there was none.

Helene Panzarino
Originally a commercial banker, Helene is an experienced fintech ‘sherpa’, programme director, exited entrepreneur, educator and author. The CEO of Blue AI, she takes community banks to the digital future by connecting them to the FinTech of the present.

She is also one of the judges on the Efma-Capgemini Financial New Tech Challenge 2021, which this year has a theme of sustainable finance.

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If you’re working – or planning to work – in a fintech or a digital team in financial services, the Certified Fintech Practitioner programme is for you.

Find out about the Certified Fintech Practitioner programme the Digital Centre website