Why Building Trust Is the Only Real Way to Grow Fintech Companies
FEATURED POST
When two gargantuan industries like finance and technology intersect, there’s naturally going to be a lot of tension.
You’re looking at a massive opportunity, but it also comes with a massive risk.
Fintech companies that do things right have the power to become an everyday word for the public. Venmo, PayPal, Cash App, all of them have managed to gain a large audience with one key trump card: trust.
It’s the soul of any financial services company — without it, there’s no chance for sustainable growth.
In this post, we’ll look at why it’s so essential that building trust and a digital identity are foundational principles for any fintech company.
Scaling Without Trust Isn’t Sustainable
If you’re in this field, you already know the kind of growth potential that exists.
Market Data Forecast shows that the North American Fintech market size was worth over $71.01 billion in 2024. By 2033, it is projected to grow at a rapid 24.5% CAGR to hit an impressive $510.32 billion.
The fact is that even if you are able to acquire a customer base quickly, if trust isn’t embedded into your company, it’s extremely fragile. You only have to open a financial magazine to read about how many startups have crashed after one poorly handled breach.
Of course, this is just one area.
Trust is very much developed across your entire customer-facing activities. It’s built during the onboarding, communication, and through constant transparency. It’s because of trust that countless customers are willing to pay high transaction fees on platforms like PayPal.
People trust it over an unvetted alternative with low fees.
Start Embracing CBDCs, AI, and New Tech Early
One of the best ways to build trust is to move away from the for-profit, private company image.
Even if that’s what you’re all about, you have to understand the connotations it brings. You very much want to position yourself as an intermediary between the government and the public, which sounds tough, but it’s really not.
The way forward is embracing Central Bank Digital Currencies (CBDCs) and AI.
Data from the Bank of International Settlements revealed that 94% of central banks are actively exploring CBDCS. This represents a country’s currency in a digital form. The study revealed that since 2023, there have been an increasing number of experiments and pilot projects in this regard.
Similarly, AI is no stranger to transforming entire industries. It’s already changed fields like entrepreneurship, where entire websites can be made with an AI-assisted builder. As Hocoos explains, all it needs is answers to a few questions, and websites are built in minutes.
With Fintech, AI is being used for investment research and instant customer support.
Fraud, Breaches, and How Trust Can Act as a Band-Aid
Moving money digitally is certainly convenient, but no one can deny the security risks involved.
According to the FBI’s 2024 Internet Crime Report, fraud was responsible for losses of up to $16.6 billion. That’s an increase of 33% when compared to 2023. Unsurprisingly, ransomware was once again a pervasive threat.
Data breaches and fraud of any kind end up corroding any confidence your customers have in your platform. Even one incident will leave people feeling hesitant to continue using your services, and this is a big problem.
When you have the trust of the people, you are at least given the benefit of the doubt. Of course, having that trust means you ought to ensure that all possible preventive steps are taken. It means treating things like authentication and security much more seriously.
At the same time, remember that trust is a band-aid, and will only get you so far. If your customers feel exposed and vulnerable, they’ll leave. In contrast, a one-second longer transaction time, which some fintechs obsess about, will rarely cause the same amount of customer loss.
At the end of the day, fintech companies are a lot more fragile than people realize.
On their own, they are far more stable and resilient, but together, they are highly reliant on public perception and regulations. This means you have to be particularly careful in areas that companies in other industries wouldn’t bother with.
Fintech is one of those fields where your competitors are just waiting to snatch up your base. Thus, put in the effort and treat every customer like you personally have a stake in their welfare.
It sounds intensive (it is), but considering the profits this industry enjoys, it’s worth it.