Fintech has finally done it. It has reached ‘coolest kid on the block’ status, so it’s no wonder that new fintech startups are sprouting like mushrooms on a daily basis. Another day another neo-bank gets launched around some niche target audience (soon we’ll see a bank for people who have been abducted by aliens) while funding and valuations continue to soar to new heights.
As a product guy (or at least how I like to view myself), I am constantly approached by entrepreneurs asking me what’s the secret sauce behind good product practice for new Fintech companies. Since there are no crash courses for Fintech (yet), here are some tips I’ve gathered over the years:
1. Find a product manager with strong analytical skills
Congrats! You have your million dollar idea, but do you have a product team with the right skills to guide you from ideation to market fit, to product launch? Sorry to break it to you, but if your product team isn’t good with numbers, they probably need to find another domain. Fintech is all about making sure the numbers align, dealing with formulas, tables, and reconciling digits on a daily basis. This might sound obvious, but many startups overlook this fact, and the last thing you want to do is find out too late that your product lead isn’t the math whiz you need to gain trust from your users.
2. Understand the layer cake and the regulatory constraints
It probably goes without saying, but you need to really get to know your domain. Become an expert on the trends, challenges, and opportunities in whatever fintech vertical you’re tackling. Do your research! What did other players in the space get wrong? Where did they succeed? Whether you’re building a lending product or integrating crypto payments into your app, you have to contend with and connect to a complex, multi-layered ecosystem in order for the product to work. This is radically different from building a siloed iOS application where the team can likely develop a full-stack solution on their own.
Fintech product launches also require a strong regulatory and compliance strategy, and you need to be able to understand the implications of innovating without one. For most domains, product management hinges on product, development, and marketing. Within the Fintech sphere however, the compliance piece is the fourth core pillar. And please, before you get started, fully consider if it’s actually feasible to launch this product in the current regulatory environment. Reverse engineering a compliance strategy is not a good idea. Even for large, well-established companies, achieving regulatory compliance can be a resource-sapping process. Just think about the regulatory hurdles Facebook has faced in the context of the Libra coin – it was introduced back in 2019 and still hasn’t launched (and probably won’t).
Remember when Venmo got hit with hefty fines for launching without a money transfer licence? To be fair, this misstep may have been a calculated move as they probably didn’t have the resources to get licensed at that stage, but do you really want to take the risk? As much as it pains me to say this, I cannot overstate how important it is to engage with lawyers and compliance professionals around the regulatory side of things.
3. Don’t slack on security
Security holes can be a nightmare, especially when we’re talking about people’s finances and hard-earned money. Fintech platforms are a high value target for hackers, so startups that are careless with people’s data or encounter disruptions to service delivery won’t fare well. How resilient is your system architecture? Who does your audits? How are you protecting sensitive financial information? What encryption is used? These are some of the key questions to consider. If you screw up here, your chances of building trust with today’s digital-savvy customer base are limited. Which brings me to my next point.
4. Build trust with customers
Building trust with the consumer is critical when bringing a Fintech product to market. Get your ducks in a row the first time around. Remember, you’re asking people to trust you with their finances and savings. The stakes are much higher than other app-centric products. Make it easy for customers to do their own due diligence on you when they visit your website, because first impressions count. Make sure they leave the webpage with a positive feeling. This will go a long way towards establishing confidence in your products. And if they’re asked to share any of their data while visiting your page, make it crystal clear why you need it and how it will be used. If you’re asking someone to deposit with you, save with you, take out an insurance product with you, you need to be credible. These are big decisions. Coherence around brand messaging and corporate identity are really important too. So figure it out! What’s your tone of voice? What do you do? In this space, granular level details like this matter.
5. Create an emotional connection with customers
Let’s be honest, people typically hate dealing with their finances, and getting them to try a new financial product or service is difficult. There has to be a solid understanding of consumer needs and sentiment around your offerings. Always, always view a decision through the lens of the end-user. Finances impact people equally, yet differently, and sometimes people don’t act rationally when it comes to their money. For example, many people, especially millennials, use debit over credit, and forgo the opportunity to earn hundreds of dollars of cash back and build credit on a rolling basis. Sorry millennials, but this doesn’t make sense. You obviously (by using debit) have the funds to pay off your purchases and won’t be aggregating debt by using credit.
In financial services, the status quo often prevails, but customers are ready for a change. A lot of the innovation happening today is on the periphery, primarily around UI or cost-saving improvements. Sometimes it’s worth taking a step back to re-engineer your product from the ground up. Consider how your product can be delivered in a completely new way, with today’s consumer in mind, and look beyond just optimizing legacy systems.
Embracing the new era of Fintech Innovation
The financial services landscape may be evolving faster than legacy solution providers would prefer, but that’s what makes this space so exciting. From neo-banks and digital brokerages to payment networks and Bitcoin ATMs, innovative Fintechs are rewriting the rules and creating new paradigms. While it’s a great time for entrepreneurs to test the water with a new Fintech product, startup success rates are low, so keep your enthusiasm in check and stick to a well-thought out and measured launch strategy.
Customers will flock to well-built Fintech platforms that deliver a fantastic experience that’s easy and intuitive for customers to use. Adhering to the core principles described in this article will go a long way in helping you gain users’ confidence, and in getting customers to migrate to your product. Just remember, winning the trust of users is only half the battle. The rest, my friends, depends on your million dollar idea.