Why Fintech Companies Need To Innovate & Scale Up Fast
When High Finance And High Tech Meet — Why Fintech Companies Need To Scale Up Fast
There was a time when all of our financial transactions were completed through banks and businesses who had been around for decades. In 2019, technology has changed the financial landscape beyond recognition with the advent of the Fintech company. Fintech (or, financial technology) refers to software and other technology which is used by businesses to provide automated and improved services such as mobile payments. Although the number of fintech companies has grown rapidly within the last few years, these businesses are still having to compete with the traditional banks, building societies and insurance providers. As technology advances, the old-school banks have responded by upping their technology game — putting fintech companies under more pressure than ever before.
In order to meet — and beat — the increased competition, fintech companies now have to move fast if they want to stay ahead. As they are unlikely to have the reputation and the financial clout that the big banks do, they simply need to be smarter — which means relying on innovation and fast scaling.
So, how’s that done?
To begin with, cost is almost always an issue for fintech companies. As many are reasonably new, they generally don’t have huge amounts of cash to play with — which is unfortunate as most rely heavily on IT manpower. There are, however, ways in which fintech companies can get ahead and, these include the holy trinity — Innovation, Disruption and Transformation, let’s take a look at these:
It’s absolutely vital for fintech companies to foster a culture of innovation throughout the entire business — from the lowest member of staff to the highest. When it comes to innovation, fintech companies need to be embracing digital more than ever before. Payment gateways, the use of blockchain and AI are all tools which the fintech firm needs to be getting onboard with if it has a hope of succeeding.
In terms of technology — particularly software — the fintech firm would do well to think about outsourcing — in particular, nearshoring — in order to get hold of talented techs at a reasonable price.
Today’s fintech business needs to be not just competing with the big boys but setting itself up as a market leader. This is done by knowing the market inside out and by collaborating or partnering with other firms, for example, a software developer. The more digital weapons a fintech has in its arsenal, the better equipped it is to compete. Even at the highest level!
Fintech companies are already disrupting the market to an extent but it’s not enough. These businesses now need to be luring customers away from the big banks by proving that they have the financial wherewithal and the customer service to go with it.
The third — and most important — part of our triangle is the transformation stage. This is the bit where fintech businesses take advantage of the disruption caused by their innovation and use it to grow their business.
Scaling a business is always a risky proposition — do it too soon and your business finances may not be able to take the strain. Wait too long and you’ll lose customers as you struggle to keep on top of demand.
As more and more big companies begin to take notice of fintech, there will be increased opportunities for partnerships — which are a great way of minimising risk when scaling up. Fintech companies across the globe are identifying businesses — including traditional financial institutions — with a view to partnerships and collaborations.
With any kind of scaling, common sense is key. It’s great to have big ideas but start slowly to avoid making costly mistakes. When investing in staff, consider outsourcing and focus on cutting edge technology — when thinking about the future; don’t think five years ahead, think 10 years ahead.
Softly does it
One thing we can be certain of is that software is going to be the hub around which fintech companies revolve. For this reason, it’s a really good idea to form a solid partnership with a software development company. When it comes to scaling up and moving forward, there can be nobody better to have in your corner.
In 2020, fintechs will continue to get the recognition that they deserve from their customers and from the industry as a whole. The smart fintech company will stay focussed on creating innovation through new technology in order to stay one step ahead in this new decade!