Effective Growth Strategy for the Future with Fintech
The emergence and growth of Fintech have changed the fabric of the financial services sector drastically. Much like how the internet revolutionized the publishing, and music & entertainment industries, it has created waves in a largely stagnant industry.
So, what is Fintech?
As per my experience, it is a blend of ‘finance’ and ‘technology’. It refers to the slew of services that organizations need based on current and emerging technologies. Over the last decade, it has changed the way people manage their finances. Global investments in Fintech are booming and new-age, technologically savvy customers are choosing this mechanism over traditional services. Banking services, loans, money transfers, bill payments, shopping services, trading & much more — Fintech has reinvented all matters related to financial transactions. Yes, it’s exciting!
What led to the emergence of Fintech?
The banking system had monopolized the financial services sector for decades. Lack of innovation sometimes steep commissions and charges was the way of life till the great depression hit in 2008. The financial services sector suffered serious losses and greatly from a general lack of trust. To recover from the crisis, banks stopped lending to both individuals and businesses alike.
The situation was ripe for a change and Fintech emerged as a viable alternative. Using technology, a new set of firms made an innovative range of services possible at lower costs.
Which way is the financial services sector headed?
Following the gradual acceptance of this technology, traditional financial institutions are busy playing catch up on the technology front. Based on the predictions made by financial gurus and industry experts, the future of financial services will be determined by how this technology mechanism evolves. And I thoroughly believe that because of the edge that it offers over traditional services, it is expected that Fintech pioneers services and solutions. This will be key to the progression of the industry.
So how do Fintech firms ensure a continuous growth curve?
The market share of Fintech companies is still low, despite the booming investments. In my experience, however, it is poised at a crucial juncture with the opportunity for growth at scale. And, it would require a sound strategy with careful execution.
· Creating an innovative and quality product line is crucial
Fintech companies need to create products based on ever-evolving customer requirements and demands. This is the rule of thumb. As technologies emerge and grow, the existing way of life is disrupted. Fintech products and services need to evolve accordingly.
· Tracking key metrics is imperative
The four metrics to track and analyze are — cost incurred per new customer acquired, average customer value, active user percentage, and the viral coefficient. These KPIs are critical to understanding how a product is received and how likely is it to be recommended. Consistent tracking and improving the core performing areas will ensure lower costs per customer and higher return on investment.
· Keep customers at the center while making all important decisions
While developing a product line and marketing strategy make sure to analyze & consider the customer journey for the existing and target client base.
· Trust and privacy to be at the heart of Fintech firms
Complying with market and government regulations is non-negotiable when people are choosing to invest their hard-earned money in an organization. An effective strategy would be to promote entry-level products to initiate and build a trusting relationship. This would enable cross-sell of higher value products and services at a later stage.
· Create public awareness of the brand
The entire base for technology is concept-driven and futuristic. Public awareness of the brand and product allows Fintech firms to explain their proposition and essentially put a face to the name. This creates trust in the mind of customers, making people interested to invest in the service. Both the press and social media are potent channels for this exercise.
· Investing in the right technology is high-priority
While this concept of the finance industry is founded on cutting-edge technology, keeping up to date is essential for survival and growth. AI, ML, Blockchain, IPA are some of the technologies that are core and will continue to grow.
· A robust customer retention plan is necessary for a fiercely competitive market
Existing customers are key to manage churn and attract potential customers. Connect and engage, solicit feedback, and create an efficient redressal process to ensure effective customer retention, as happy customers are the best brand ambassadors.
· Keep creativity alive
Despite being part of the financial services industry, innovation is key to a successful Fintech firm. The more the customers are ‘wowed’, the better the chances of success.
In conclusion, I can safely say that this industry is to witness continuous growth. As the customer base becomes more technologically confident, Fintech companies will explore emerging technologies, to catalyze change and increase the benchmark of the financial services industry. What according to you could be different avenues of growth for fintech? Let me know your thoughts in the comments.
About the Author:
Saumil Shah, the CSO at Rishabh Software, is a technocrat with a successful track record of helping clients solve complex business problems. Under his strategic presidency, Rishabh has established a prominent market presence across multiple domains like Healthcare, Retail, Manufacturing, FinTech & more. He is an alumnus of IIT-Kanpur & London Business School and has been on the advisory panel of industry-leading bodies like NASCOM and GESIA. When he’s not busy solving business technology challenges, he enjoys playing tennis or football.
