How to Win in Fintech

Whether you are still in the early stages, searching for your big idea or at an established company looking to bring something new and disruptive to the table, these are the key questions to ask yourself:

1. What financial process can I improve to create a better customer experience at a lower price?
2. What financial difficulty can I ease to create a more convenient customer experience?
3. Which fintech ecosystems are in need of and open to new products/services?

These three questions can be turned into three consumer desires. Consumers want a fintech company to:

1. Make Something Cheaper,
2. Make Something Easier, or
3. Make Something Just For Me

If you can meet these demands from the market, you’ll be on the path to success in the fintech space. Below we’ll explore some ways you can meet each of these market demands and we’ll illustrate each point with a success story from an existing company.

Using Fintech to Make Something Cheaper

The first question to ask yourself is what financial process can I improve to create a better customer experience at a lower price? This comes first because in fintech, making things cheaper almost always yields good results. 

You still, of course, need to make money. You can’t make things cheaper to such a degree that you run your business into the ground. But, focusing on making things cheaper for consumers might lead you to some out-of-the-box ways of driving revenue.

Consider the case of Microsoft’s Xbox. If Microsoft saw charging consumers for the console as their revenue source (a natural assumption, you make something and then you charge people for it), then the price of an Xbox would be much higher than it is.

Microsoft keeps the price of the console down. In fact, by some accounts, they actually lose money on the Xbox consoles. Yet, the Xbox is a huge moneymaker for the company? How? Microsoft derives value from the number of Xbox consoles that are out there. That’s because game developers have limited options for getting their games into the hands of gamers, and Xbox has a large share of the market. So game developers are willing to pay huge sums to distribute games via the Xbox and Microsoft earns way more money from distribution deals and licensing than they would from individual gamers buying consoles at full price. Hence, Microsoft is willing to practically give the consoles away to consumers because the consumers (the people who play the games) are not their customers. Their customers, the people who make the games and pay to distribute are essentially subsidizing the price of the consoles.

So when looking at the fintech space and trying to meet market demand number one, make something cheaper, remember Microsoft and the Xbox. Look for segments of the market that have two distinct consumers and customers and find ways to get your customers to subsidize your consumers’ demand for cheaper products and services.

Using Fintech to Make Something Easier

When it comes to finances, many of the processes are complicated and confusing. This makes even the simplest of transactions unnecessarily complex (For proof, if you are a masochist, try sending $100 from Atlanta, Georgia to someone in Tbilisi, Georgia, and read all of the fine print that goes along with the transaction). There is money to be made in deciphering all of the financial mumbo jumbo and simplifying a complex process.

For inspiration, look at another industry that is known for its liberal use of mumbo jumbo, the law. Lawyers are so known for their particular brand of jargon, we have a word for it: legalese. Enter Legal Zoom, the tech-enabled law company that provides legal resources with different degrees of lawyer-involvement including “self-serve” documents. Need a Power of Attorney document? You can hire a law firm, pay their hourly rate, have them create one for you, then go to the office to sign it. Or you can go to Legal Zoom, pay a few dollars and print out your own document in minutes.

Turning something that is complex into something straightforward is a great way to create any business. And, since finance is almost always in need of simplification, fintechs have a unique opportunity to turn making something easier for consumers into making money.

Using Fintech to Make Something for a Specific Market

This may be the last of our considerations, but don’t overlook the power of customization to make your business uniquely suited to your different customers’ situations. Anything related to finance will face some sort of regulation. And, regulations change from country to country, region to region, sometimes even from one city to the next. You don’t, and probably shouldn’t, customize for every scenario. But, picking lucrative markets and addressing their needs can pay off big time.

As Ron Friedman related in his 2021 book Decoding Greatness, manufacturing giant, General Electric, stumbled upon this lesson when they introduced their big new electrocardiogram (EKG) machines in the early 1990s. GE’s top brass expected the machines to sell particularly well in one market: India. Why India? At the time, India was home to roughly two-thirds of the heart disease patients in the world and EKG machines were expected to become an essential part of diagnosis and treatment there. 

The new EKG machines sold well in many locations, but the big sales numbers in India failed to materialize. GE executives were flummoxed. The new machines were priced appropriately and were getting rave reviews from customers. Why hadn’t the new machines caught on in India? The answer was so simple it was easy to overlook. The EKG machines were big, heavy, and immobile. In India, doctors often traveled from population centers to see patients in small towns and remote villages. Any piece of equipment that couldn’t be picked up and carried easily from one place to another was not going to sell well to Indian doctors, no matter how well it worked. GE went back to the drawing board and designed a small, lightweight, easily portable EKG machine for the Indian market. These machines, again, saw unexpected sales. They did well in the Indian market, with traveling doctors snapping them up, but they also sold well outside of India. When word got out that there was a portable version of the original EKG machine, they began to outsell the original and still do today.

The moral of this last story is that sometimes you find success in places you might not have thought to look. But you thought to look here, at this article, and hopefully we’ve opened your eyes to some new ways to look at success in the fintech world.