Will the fintech bandwagon reach critical mass in 2016? I don’t know, but a new survey by EY suggests it might.
According to the survey of 10,000 digitally active consumers, the take-up of fintech services is set double within the year, especially among the young, wealthy and urban. Key headlines:
15.5% of digitally active consumers have used at least two FinTech products within the last six months.
and
As awareness of the available products and services increases, adoption rates could double within the year.
Traditional retail banks & other consumer financial service providers should be concerned.
Why is fintech succeeding?
Let’s take a look at the top 7 reasons consumers are using fintech:
‘Ease of use’ trumps ‘better rates/fees, online experience & functionality’
The data is telling us that people care about ease of use three times as much as better rates/fees, and 4 times as much as better online experience, functionality or quality of service.
The point for me is that people don’t care about the technology or functionality (as long as it works!)
They do care however about what it can do for them. If it makes their lives easier for example, then great.
‘Access to different products and services’
Be where your prospects, leads and customers are. Before they become a customer, and while they are a customer. Mobile, social, (not?) on the high street. Wherever.
‘Better quality of service’
Let’s face it, the bar could hardly be lower for (most) traditional financial service providers.
‘More innovative products than the traditional bank’
Just one in 18 choose fintech firms because they offer more innovative products.
Could it be that consumers are (for now at least) going for fintech products that are faster horses rather than entirely new beasts? As for what’s under the bonnet (or ‘hood’ to my US friends), innovation is of no interest to the customer. ‘Permissionless blockchain madam’? Thought not!
‘Trust’
1.8% choose fintech on trust grounds vs 11.2% who avoid it on trust grounds!
Despite everything, incumbents have the upper hand on trust. Time will tell, but as fintech becomes more familiar, the opportunity to close and reverse the gap will increase.
(Personally, I expect the war for trust both between fintech and the incumbents, and between fintechs themselves to be pivotal over the next few years.)
Why is fintech failing?
Now, here are the top 6 obstacles to people taking up fintech:
‘Lack of awareness’
The overwhelming challenge for fintech is lack of awareness among prospective customers.
The question is: what are you going to do about it?
Are you going to bet the farm on spay and pray tactics, like traditional ads (aka interruption marketing)? Or are you going to take a more targeted approach based on a thorough assessment of who your customer is and what problem you’re solving for them?
‘Did not have a need to use them’
Good. You don’t want to be trying to sell to everyone. Why? Because no-one will care.
The more exclusive your proposition, the more it will appeal to those it does.
On the other hand…
Could it be, you’re failing to communicate why what you have to offer, solves a problem for your prospective customers? Or, could it be, you don’t know what problem you’re solving? Or, perhaps you don’t know who your customer is?
‘Prefer to use a traditional financial services provider’
Hmm. Again, maybe they actually do. No problem. Again you’ll never appeal to everyone, so don’t try.
And then again…
Perhaps you’re not getting across why you’re better, and for who.
‘Don’t understand how they work’
Get over it and sort it out.
Could it be you’re not making the problem you’re solving clear?
Or, could you be failing to explain how and why your product works for your prospective customer?
Or, perhaps you’re not communicating the benefit effectively…
‘Do not trust them’
Are you doing what most of your fintech competitors are doing and imploring random visitors to sign-up the very first time they come across you (ad, website, app store)?
At a cocktail party, would you be asking complete strangers to make out right away? Good luck with that.
People buy from people. And fintech startups are no exception. But they only buy from people they know, like and trust. And that takes time…
What are you doing to encourage people to know, like and trust you and what you have to offer?
‘Have used fintech in the past, but don’t want to use it again’
How do your customers think you treat them? If they’re not sticking around, you might want to find out why, and fix it.
But as I like to say, you can’t go far wrong if you over-promise and over-deliver.
Why does this matter?
As competition intensifies (with incumbents and among fintech contenders), understanding your customer and your value proposition will become ever more critical.
Banging on about technology and features will drive people away.
Begging people to sign-up without first earning their trust will continue to fail.
The willingness and ability to dig deep to understand who your prospective customers are, and what they want, will separate the winners from the losers.
Read more: Marketing & The 3 Levers of Growth
Ben Breen has been building software, teams, products & companies since 1979 including 20 years in banking & capital markets. Since leaving JP Morgan in 2001 he's founded several companies. In 2010 Ben discovered the transcendent powers of marketing. He founded Engorah to help fintech firms find their first customers, scale growth & get a better deal with investors.
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