You have likely heard the old adage “what you don’t know can’t hurt you.” Well not surprisingly, this isn’t true, particularly in financial services, buyer beware and transparency issues notwithstanding. Many founders often do not appreciate all the elements needed to successfully scale a business and launch a new product. Most fintechies are pretty savvy folks and like to think they are smarter than the average Joe. Many fintech founders are right much of the time, but when it comes to launching new products even the smartest can run into challenges.
Where do they get hung up? Amazing technology does not necessarily mean a product is great or that customers will come running. And even when customers are interested, there are many hurdles to overcome to drive adoption, usage and ongoing engagement.
Developing and launching a new product does not ensure that customers will line up around the block to buy it. Here are some of challenges FinTech startups may face:
Top Three Mistakes That Can Hold Back Fintech Companies
Lack of Customer Insight. Many companies start out as products in search of customers, but that’s not the way to build a business. You need to determine who actually needs your new product. Not only do customers have to want and need your offering, but they also have to be willing to pay for it.
Is your product actually solving a problem they have and do they care about it enough to fork over dough to have you fix it for them?
Many new ideas around data security, workflow automation, compliance monitoring, data mining among others are applicable across a wide range of use cases – including financial services because of the potential for disruption. Startups are also attracted large bank technology resources, budgets and the regulatory mandates that must be addressed. However, financial services, while attractive, may not always be where you should focus, particularly if you don’t understand the market you are targeting.
It’s important to clarify where your product fits. Are you a complete offering or a product feature or function that is simply an enhancement or component of a larger business requirement?
You need to get granular – about the company type, the market, the end user, the decision-makers and the adoption process. If you are selling to a large bank, it may be necessary to get buy-in from multiple parties (CTO, COO, CRO, CSO…) and go through a trial adoption period with users who may identify issues with what you’ve developed. This is often not a short process for those who have been through a typical bank initiative launch.
If your offering is more of a feature, then you may be better off partnering with existing vendors who need your functionality, rather than selling directly to end users. Ideally your solution can be used by multiple customer segments, but make sure you initially start with and focus on one to prove that use case before trying to be all things to all people.
No Go-To-Market Strategy. Many financial technology organizations focus on product development. However, many companies focus exclusively on delivering the functionality, without realizing you can’t really go live without customers, particularly for many financial offerings which are often two-sided markets.
Many companies overlook the importance of having a full launch program that addresses all aspects of bringing the product to market from contracts and legal, account management and customer service to marketing and industry relations.
Too often firms engage a public relations firm thinking that PR will increase their visibility in and of itself. This is often unrealistic because new businesses often aren’t considered newsworthy until they have established a track record or have a compelling story (such as significant investors or a completely unique approach). In such a highly competitive market, startups need to increase market awareness by building relationships and pushing messaging to the right audiences across as many channels as possible. Which leads to our last challenge.
Poor Communication: Many companies are unable to clearly articulate their value proposition and choose to keep a low profile in the market. If you are trying to drive client adoption, then you need to think about building your brand and creating market awareness.
Effective marketing planning can help increase market awareness of your business and build a brand which can convey a larger more professional presence even if you are a startup.
Why do you want a brand? Brands are what people are ultimately buying –what you stand for and how you make people feel.
The most successful fintech startups recognize that introducing a new product or service requires an unwavering focus on customer needs, a commitment to actively promoting their new offering, communicating their value proposition and building their brand.
Lenore Kantor, Chief Launch Officer, Launch Warrior
Lenore has over 20 years of financial services experience having launching more than 100 products and services.