FinTech: Selling Something That Nobody Wants
The guy I was talking to, Sebastien, was a 22-year-old student at Concordia University. He lived separately from his parents, but was still heavily dependent on their support. He had $5,000 in savings, small side income and no debt.
We were in a Saint-Henry cafe, and I was “selling” Sebastien my competitors’ products.
No, I wasn’t trying to help my competitors and I surely wasn’t talking to strangers for fun. I had to do it to really understand what was going on behind the scenes of the hyped “FinTech revolution” — to cut through the noise of articles, newsletters and clueless opinions of myriads of “experts”. I had to understand The User — the driving force behind the changes in financial industry.
Sebastien was a representative of my target audience. And since my competitors already had products, I didn’t have to wait for my own to learn about challenges I would face selling it.
Sebastien did not need any financial product.
Planning for Life Goals. Financial plans. Budgets. Low-cost investing. Retirement savings. He didn’t even care about ‘smart AI-powered portfolios’ (yeah, I know — who wouldn’t want that, right?)
Nobody Wants Financial Products
Sebastien, and many many others I spoke to (I reached thousands directly and through advisors), did not want any financial products. And why would they?
Financial products are confusing, complex, hypothetical constructs that can only be understood through the benefits they generate.
When we buy something — we buy the “benefits” of having that product. We know the benefits of a car, a vacation, a new kitchen. But financial products are different — their benefits are not obvious, usually long-term and, most importantly, the benefits change based on who you ask: the same $1,000 can represent millions of different benefits for millions of different people. That’s why we see that “robo-advisors” value proposition “invest to ensure your comfortable retirement” (product + benefit) does not work for those who don’t care about comfortable retirement for now (pretty much all of millennials).
How unneeded products are being sold right now
You would need armies of sales people (calling them “advisors” could help a lot) who would conduct long and painful one-on-one selling process, often using peer pressure, scare tactics and appeal to authority to make a sale. The best ones would be able to understand your life well enough to match it with the benefits of financial products, but those “advisors” would be unaffordable for most.
You would also need to spend billions on advertisement and marketing, trying to convince people that they may be missing something in life and that any decision they make in life is a “financial” one, therefore it requires a “finance” professional (duh!) not to screw it up (in reality though “financial decisions” don’t exist: we have life decisionsthat have an impact on our finances).
In other words, this is a very hard and painful sale process, with extremely high CAC (Customer Acquisition Costs — or cost to make a sale). That’s exactly what we have now in finance industry. Peter Misek, partner at BDC IT Venture Fund, called high CAC as #1 problem: “Number one problem they all have… [3,000 FinTechs BDC tracks] is unit economics, meaning how much it costs them to acquire a customerand what kind of money they can generate of it”).
It costs a lot to sell something that people don’t want.
Mistake FinTechs make
Simple: they are bringing non-financial consumer product mindset to financial products. “Give people better cheaper products with easier “shopping” experience — and they will buy”.
No, they won’t!
That approach would be true for cell-phones, cars, TVs, etc. — where we immediately see the benefits. But this won’t work for financial products: if Sebastien does not see a benefit from investing — he won’t invest, even if it costs “just a fraction of what an advisor would charge him”. Not even if “it takes just a minute to set-up”.
Don’t build yet another financial product to add to the existing pile of them!
Build a service that would link existing financial products with the unique benefits they bring, making people want to buy them
When we understand the benefits — we want to buy, whether it’s an investment or a cell-phone or a TV. The armies of advisors will become unnecessary (in most cases) and your CAC will plummet.
Here’s what should be the key features of an ideal tool:
- Artificial Intelligence: Since the same financial product can represent different benefits to different people ($500 can buy you a fishing rode or a guitar or new shoes or add to your comfortable retirement), the ideal tool would be intelligent to understand each user personally and highlight the life benefits for that user’s unique life.
- Gamification: It has to be fun, engaging and super easy to use, so gamification concepts could come quite handy here.
In summary, you would have artificial intelligence that uses gamification to showcase unique benefits of a financial product, making people want to buy it. Shopping for financial products could be as easy as shopping at Amazon!
That’s why we had to build Perfiqt. Sign-up and be one of the first to see this powerful AI in action!
Share your thoughts if you had an experience selling financial products or services. What was the most challenging part?