Building Fintech Today
Fintech belongs to either innovators, who introduce entirely new concepts or products to the market, and converters, who modify existing ideas or technologies to create new financial products or introduce new ways of accessibility.
Understanding a fintech role as an innovator or converter helps in defining the fintech’s strategy; will help in building ideal customer profile, forging meaningful partnership, brand positioning and resources allocation.
Converters are more popular and generally more attractive because they can grow quicker while helping the growth of existing solutions. But innovators have a higher chance of building big businesses.
A Fintechs needs to define its Ideal customer profile (ICP). An ideal customer profile is a description of the users that’s believed to be a perfect fit for their products or services.
Identifying and prioritising the targeted ICP provides a clear story and early data points that proves the fintech’s solution. Besides, there’s a big opportunity cost to every user acquisition, so it’s critical to serve the right customers.
You should not be afraid to drop customers that do not fit into the ICP any more. Being stuck with an imperfect customer, even if they’re generating revenue now, will get in the way of fintech’s focus and growth.
Every fintech is in the risk business. Fintechs live or die on their ability to manage fraud and risk. They must deal with not only user acquisition cost, user support cost, etc, but also with the fraud and risk of each user.
A fintech’s absolute downside is not zero, but negative. A bad user in fintech can go beyond zero and actually cost money.
Treating risk management as an unavoidable cost of doing business will retaliate in revenue, resource, and user experience.
Early on in the development of their business model and/or product, fintech must decide on risk exposure controls. By incorporating risk measures into their core products, not only minimise losses of bad users, but do so without degrading the experience for good users.
Best fintech finds ways to shorten the development process but still providing a ready to use solution to the customers. This can be by changing the shape of a product to make adoption easier or unique bundling and co-selling with existing solutions.
Don’t be afraid to build with existing professional solutions. They bring faster time-to-market, access to expertise and reduced development risks; Yes, they bring additional costs and may affect revenues, but only in a short run; the strategy is to use them as a product crutch, and not dependencies.
