With all the buzz around fintech as an industry set to revolutionize financial services, banking, payments, and other segments, it may be surprising to hear that many companies within it are also struggling to make it. However, there are many issues that fintech has to address before it grows into its true potential. Other more established fintech companies must be proactive to maintain and then expand their market share.
As a CMO for a fintech company, you may find yourself facing some key challenges around brand development, messaging, and audience engagement. The good news is that there are also some signs that help is on its way in the form of technology strategy consulting firms.
The FinTech Environment
In setting the scene for fintech’s influence, McKinsey & Company noted that, while there is noise about what fintech might be able to do, there is not complete trust that these firms can accomplish these benefits and changes. There has been significant investment in fintech startups that can address issues within numerous industries. Retail, commercial, account management, capital markets, payments and lending have all benefitted from fintech solutions.
McKinsey & Company reported that “globally, nearly $23 billion of venture capital and growth equity has been deployed to fintechs over the past five years, and this number is growing quickly: $12.2 billion was deployed in 2014 alone.” BCG highlighted just how many banks are now investing in fintech startups to ensure their survival as the financial services industry continues to evolve. However, it seems that VC funding is now slowing for fintech startups.
The environment has exposed many areas that need innovative solutions, including payments and remittance. The momentum that is pushing consumers and businesses toward alternative types of payments has been the impetus for fintech growth. New digital channels and technology like blockchain are adding to the excitement and interest. Yet, challenges are stifling some of what’s possible.
Challenges To Face
Gaining customer trust is the biggest challenge for fintech firms and one that marketers have been charged with improving through their engagement strategies. That’s because consumers and businesses are already wary because of the ongoing data breaches and monetization of their data.
For customers, they want to stick with the long-established traditional financial services brands that have served them well. They are not sure how new fintech products that include non-human communication can help them address their personal financial concerns. As BCG noted, “Although their service models have attracted considerable attention, fintechs are unlikely to endanger established corporate banks in the near term. Existing players hold sizable structural, economic, and relationship advantages that new entrants will have trouble overcoming.”
Yet, some of these traditional financial services brands are not offering some of the more convenient products and services that new unknown fintech brands are touting. And, even long-established brands are getting caught up in data breaches like the recent Equifax breach that compromised 143 million people’s personal data from credit reports.
These illustrate some of the key areas where a CMO must redirect their strategy to specifically address in their messaging, content, and discussions with target audiences.
Specialized Care For Strategic Execution
Technology strategy consulting is emerging as a way to help these fintech companies face these challenges. With the help of management and technology consulting firms like Northshore Partners, a fintech company can receive specialized care from experts that are part of the biggest names in finance. This smaller approach management and technology consulting are still big on personalization and attention. These are two benefits that larger management consulting firms like Bain and McKinsey have struggled to offer.
Using the management and technology combined approach, Northshore Partners team offers unique tactics for highly targeted audiences. Rather than just seeing themselves as a partner or outside consultant, Inderpal Singh, Founder and Managing Director of the company, and his team view themselves as part of the firm.
The assistance focuses on providing direction on how to more effectively operate their companies. Four pillars frame this approach. These include growth strategy, product development, performance analysis, and technology and operations renovation. These pillars serve as the structure used to assist in executing on a strategy that can prepare a company for leaping over existing and future regulatory hurdles.
Strategic Approaches To Building Trust
As Inderpal foresees, the challenges that remain require this personalized strategic direction for fintech brands. “Banks have relied on their trust relationship with consumers. Customers will become less brand conscious. They will need to focus on user experience to ensure they can trust a company. But, they will not necessarily be stuck on a bank brand name to establish trust.”
Having deep expertise from additional fintech experts can provide insights and direction. Direction can also include competitive analysis, consumer research, team mentoring and coaching, and web and mobile design and development. Therefore, the fintech industry can better address what their audiences and customers are seeking.
At the same time, CMOs can also change their marketing approach and content to address the concerns and gaps in understanding about the value fintech truly delivers in relation to specific audience segment pain points.
The need for a strategic partner that works as part of the firm may also help what McKinsey & Company calls the seven critical changes that are set to occur as fintech continues to mature as an industry. These critical changes include expanding application scope, increasing diversity, collaborative partnerships, consolidation, normalizing valuations, shifting regulations, and emerging ecosystems.
If a fintech firm wants to sustain itself, then it must address all these changes. That’s where these firms can provide the most value. Becoming part of the company helps deliver the most personalized recommendations possible. The result is that customers can trust them.