Fintech has become an umbrella term that covers a host of companies using an amalgamation of software and technology for providing financial services. It has garnered attention in all industries including banking, insurance, wealth management, etc.
Fintech solutions have changed the world in a way wherein now many businesses are trying to take valuable business lessons from Fintech startups. According to a report from Deloitte, nearly 2,500 new financial companies were established during 2008-2017. Not only that, but these have also pushed many other industries to go to the next level of innovation.
So let’s go ahead and learn more about how Fintech startups can inspire other business sectors.
Why Fintech Matters to the World of Business?
The evolution of Fintech has forever changed the way companies do business. The traditional method of a startup directly turning to its local high street bank or a conventional investor is not only the game in town now.
There has never been much choice for entrepreneurs from crowdsourcing to mobile payments as there is now. For instance, crowdsourcing allows people to get funding quickly and easily from anywhere in the world from people whom they have never met. All credits go to the innovations of Fintechs.
Now entrepreneurs can pitch directly to the world instead of talking for months with the investors and also enables them to see the funds roll in within a matter of weeks rather than months.
Another area is transferring money across the borders – a bane of entrepreneurs’ lives since time immemorial. Fintechs have turned this traditional and expensive banking solution on its head and enabled transferring money across borders far cheaper than was previously possible.
The above are just a few of the many ways Fintechs matters to the business world. These can pass on huge savings as they are far more agile than the traditional banks, and since they lack size this also allows them to innovate and adapt in a bigger way.
7 Incredible Lessons from the Fintech Space
Lesson #1 – Understanding the Customers
This may sound similar but is never too much of it. The most important and profitable secret of any Fintech is its customer-centric approach. Traditional banks have had non-friendly services due to their rules and bureaucracy primacies,
For instance, TransferWise CEO – Taavet Hinrikus, had once decided to launch a P2P money transfer service with low fees as he found that he loses 5% on each transaction. He also found that many people face the same. So he enabled empathy to find out the customer needs and introduced a viable solution.
Lesson #2 – Foster Inclusion
Inclusion divides into two essential elements – audience coverage and omnichannel interactions. Similarly, banks need to focus on them:
1. Audience Coverage: Similar to individuals, some small and medium-sized enterprises may also be unbanked or underbanked. So, startups can target them to deliver the needed offers like money transfers, loans, or savings accounts.
2. Omnichannel Interactions: Apart from the general inclusions, financial institutions should focus on reach. Invest in different channels, from traditional phones and emails to the alluring social media platforms. This clearly shows that combining digital and physical interactions helps to cover the majority of your business customers.
Lesson #3 – Focusing on One Solution
Nowadays, enterprises focus on a wide range of services – investment banking, payments, management, billing, and so on. However the fintech startup bankings don’t have enough resources, so they focus on only one service and polish it.
Hence by creating targeted products they reach higher ROI. This clearly indicates other businesses to look at delivering core value into new narrow areas.
Lesson #4 – Be Agile
Most often, startups stick to agile development wherein they facilitate quick releases, feedback gathering, budget spending, etc. it focuses on a series of short sprints with unique goals along with regular customer feedback so that customers can adapt to the changes rapidly.
A versatile reaction to customer concerns can save the entire business. Adding several support options like channels in messengers such as Telegram or Slack or by enabling 24/7 custom online chats, you show that you prioritise client needs and are ready to answer their queries at any moment.
Lesson #5 – Move to Open Banking
Earlier banks used to hide data. But with new initiatives in the area of open banking, this approach has become way outdated. Startups have realised the potential benefits, so have built products based on open APIs and third-party connections.
This innovative financial ecosystem enables developers to create apps and connect them to existing solutions, wherein their data is protected and users get more control over it.
Lesson #6 – Use of Interactive Elements
A good per cent of users leveraging the benefits of Fintechs are millennials and Gen Z. Fintech players sure know how to keep the users engaged. In order to prolong users’ time inside the application, the Fintech app developers know very well to put unconventional in-app elements in the form of games, contests, quizzes, etc.
Here they also intend to aim to educate their users about their new product launches or feature additions. In addition, the users receive rewards in the form of low-interest rates, subscriptions, and discounts, or even gadgets.
Lesson #7 – Inclusion of Voice Assistants and Chatbots
Chatbots are always known for changing a business’s growth story. The inclusion of voice assistants and chatbots can open up the business to the never-sleeping Gen Z and it was a great contribution by Fintechs.
These bots can assist users by checking the account balance, paying utility bills, reviewing transaction history, etc. These chatbots can even send users notification about their bill payments dues, warn them of low balance, and also offer extensive proactive financial guidance. This leads to more convenience for the end-user.
Let’s Evolve Together
So, why are these lessons important? Well, most importantly it’s because of their relevance. With the Fintech startups emerging at an insane rate, they focus on traditional businesses as well as on the underbanked companies. They are innovation financial transactions and how banking is conducted in this new decade.
Finezza assists lending firms in leveraging the latest technologies for disbursing loans and managing entire lending lifecycle management. Our team of tech and product veterans has the domain knowledge and understanding of what matters for financial inclusion.
Contact us today to find out more about our services!