There has been a lot of discussion in recent years about the growing prevalence and power of the Fintech industry. A week does not go by without hearing about some headline-grabbing new platform, app, or service clamoring to be the next industry disrupter. But after all the fanfare has died down, the reality is that a lot of these companies end up failing.
The question is why.
A recent whitepaper released by William Mills Agency, details ten top factors leading to the failure of new Fintech companies. Some of the mistakes cited in the white paper include: not having access to sufficient funding, underestimating length of Fintech sales cycles, and not building relationships with the bank core providers.
All of the above areas are extremely important to the health of any Fintech company, no doubt. But, we want to focus in on one area in particular: many newer Fintech companies do not invest nearly enough in their marketing, sales and market research initiatives.
Without a solid understanding of the market and without building a strong sense of trust with customers, even the most promising Fintech company would be digging its own grave.
Let’s look at these three areas in a little more detail:
There are many Fintech companies out there sporting trendy websites with a flashy UI. They maintain a blog, have active social media accounts, and make it a point to put out press releases at every major turn. But very few of these companies have a universal marketing plan that brings the whole organization and its communications in line with their marketing efforts, and even fewer understand the factors that make their customers tick.
That’s a problem, because one of the biggest challenges facing newer Fintech companies is in getting users to trust them to hold or handle their money. They need to not only give prospects a very good reason to buy in, but they need to convince them that the company will still be there when they wake up in the morning.
Sales and Customer Care
Do a little research online and you will find that most Fintech companies are not known for their great customer service. There is also some backlash among users towards companies that try a bit too aggressively to up sell their products or services.
As mentioned above, one of a Fintech company’s most important goals is to build trust within its target market. Instead, these companies should spend some time trying to understand their users’ problems, issues, and questions, and then try to solve them instead of immediately pressuring them with an up sale.
On the heels of the two points above is the need to actively research the market. Without an understanding of the prevailing trends and opportunities, as well as the regulatory requirements that are shaping the financial services sector, a new business can easily get off track. For example, they could end up attracting a market that is different from the one they were originally targeting.
One area in particular that many new Fintech companies miss is in generating feedback from customers via surveys and analysis of user data. These companies are sitting on a goldmine of important information that they could use to make vital business decisions, but they are failing to tap into it.
The Fintech industry these days is by nature a disruptive one. That means the risk is already high from the get go. Many good companies fail because they don’t see the glaring potholes in the road ahead. But they can potentially steer clear of these pitfalls simply by investing in the things that will bring them a real understanding of the market and a real connection to their users.
That’s a lesson any company should learn.
Are you investing enough in your Fintech company?
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