What Makes a Great FinTech?
Image - Australian Fintech
To say that FinTech (financial technology) is an industry on the rise is a huge understatement. Record-high investment, M&A activity, rapid development of complementary technologies (e.g. artificial intelligence, blockchain, smart contracts, cloud) have been fueling innovation for over the last decade. Adding the wide access and usage of smartphones (or other app-enabled devices), customers looking for options other than banks, and open regulatory environments in certain countries around the world (most notably China) -- and this sector of financial services is setup for superb future growth.
Fintech continues to evolve as customers now trust these digital-only companies more than ever, slowly migrating deposit balances and other assets away from banks and traditional institutions. If you're an individual interested in investing, working for, or building the next great fintech, here are four areas to examine closely:
> Amazing user experience (UX)
Tremendous opportunities exist in improving (or revamping) legacy design and user interfaces, and recent technology enhancements in big data and artificial intelligence have made it possible; these enhancements have led to not only overall efficiency, but customization for targeted customer experiences. Clients appreciate simplifying complex processes, and making steps in processes easy to understand and follow. From obtaining a pre-approval for a home purchase to opening a brokerage account, fintechs have been able to provide these services in minutes. However, large institutions are starting to close this UX gap against agile start-ups by making their own customer-centric updates in-house or through acquiring other companies.
> Easy-to- understand value proposition
A company that can easily describe their value in a few moments sets itself apart from others instantly. When it comes to complex financial topics of credit, savings, and retirement, it’s important to establish trust as great fintechs are able to “do what they say” by executing on their value proposition. A recent example is Zelle, which has grown in popularity through its partnerships with institutions and by delivering on its transfer service "as an easy way to send money between almost any U.S. bank accounts typically within minutes" -- at no cost or required disclosure of account numbers.
> People connecting gaps
Despite the tremendous volume of advancement in fintech, not all of a company’s activities should be performed programmatically, especially when it comes to critical touch points. The most successful fintechs tend to keep the human element alive, especially when responding to complex needs that algorithms have a tough time uncovering or resolving. Companies proactively know where in their product/service road map to place people to best assist their clients along their journey, instead of delegating all core functions to self-service. A great example is Better Mortgage, a fintech that provides purchase loan pre-approvals in minutes and layers in its people to help customers make the move through the entire home buying process, proactively answering questions and concerns along the way.
> Driven by deep purpose
Going above and beyond profit, the best companies look for that higher purpose to create a truly engaged workforce and strengthen team culture. For fintechs that identify as being mission-driven, empowering individuals towards financial wellness and independence is a powerful theme that emerging start-ups and established firms have embraced. This is a great way for employees to find purpose of work and bring passion to their daily activities. EarnUp has helped customers save thousands in interest payments by helping clients make automatic monthly payments that sync with income and other expenses, in an effort to "give control back to everyone frustrated in managing their finances."
Technology continues to develop and change the way we go about our daily lives, which can be seen in its impact in finance through financial services. As the fintech industry continues to grow, companies continue to battle for market share focusing on creating a product that not only takes captures the latest technological trends but also solves a major problem for customers. The top fintechs will be able to address complex issues with transparent, easy-to-follow service that delivers as promised consistently.
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