Is it Possible for Fintechs to Scale When the Market is Unstable?

Fintech, in the guise that we know it today, really only began to establish after the 2008 financial crisis. Consequently, the last 10 years have been a period of rapid expansion. At one point, the sectors seemed unstoppable, but now it’s coming of age, regulation has crept in, with the Financial Services and Markets Act 2023, and things are getting harder. While few would argue against the necessity of regulation in the sector, it has led to a consolidation and contraction of the industry, which has left many smaller businesses and startups floundering. So, is it possible for fintech companies to scale in such uncertain conditions?

BY Matic Jug, Head of Growth at ICONOMI

Understanding what scaling looks like in today’s fintech market

Not so long ago, scaling in fintech was about conquering all. It meant growth at any cost – global expansion or bust. Nothing else mattered. And more often than not, it led to business failure – as evidenced by the fact that there’s a 75% fintech start up failure rate. Such a devastating rate of attrition speaks volumes about the established growth practices deployed by the industry, and highlights the need for a new approach, something that supports scaling in a more sustainable manner.

Sustainable growth strategies for fintech businesses

Doubling down on data

Data has always carried value in fintech, but with artificial intelligence (AI) now capable of accessing, processing, and extracting insights from vast amounts of data at breath-taking speed, it holds even more potential. Data should be at the heart of every decision. In my business, it’s the foundation for everything we do. We don’t just track user engagement, we analyse every part of the customer journey, enabling us to determine what encourages users to stay, where potential investors drop off and why, and what leads to the best conversions. We’ve split tested every stage of our onboarding process with an aim of simplifying things for our users. It took a huge amount of time and effort, but we were rewarded with an increase in conversion rates of over 600%. 

In short, data can be transformative for any business if used correctly. You just have to be willing to put in the work. 

Enhancing user experience

In my business, our split testing process was done solely to enhance the user experience (UX) of our site. And this is important, because for most of our users, crypto is new. Most of them have experience of investing within traditional finance models, but crypto – and to a certain extent, fintech – is a completely new prospect. It’s not just the products that are new, it’s the processes, and even the language. And that can be daunting. So, if you want to attract customers and secure their loyalty, you need to make the experience as simple, frictionless, and stress-free as possible.  

Find your focus

It doesn’t matter what your business is, you can’t cater for everyone. And too many fintechs fail, trying to do just that. One of the most effective ways for new businesses to grow, is to find a core audience and tailor their services to suit. That’s why we’ve seen such significant growth in niche banking in the last few years. When you answer all of the needs of a single customer group, you secure their loyalty, and it is loyalty that drives long-term success.

Build trust

Trust has always been a problem in finance. There have been endless scams, bad actors, and collapses. So, if you’re going to succeed with such a backdrop, you have to prove your trustworthiness above everything else. Your business must be a paragon of virtue that adopts self-regulation before governments implement it. Because the only businesses that are likely to survive the current period of consolidation are those that can prove that they are legitimate, transparent, and built for the benefit of their customers. 

Be transparent

And leading on from trust building is the need for complete transparency – something that has been almost entirely absent from the financial market until now. Fintech is meant to be something fresh and new, differentiated by its transparency. So, if you’re operating in the fintech space, you need to stop hiding the risks and negative factors. Instead, it’s time to fix them. Focus on security and invite third-party audits. And explain any risks clearly and concisely, allowing for informed decision making at all times.

Educate your customers

Lastly, help your prospective customers to understand your industry. One of the reasons why fintech remained an outlier for so long is because people simply don’t understand it. And they never will, unless the businesses that serve the industry help. So, provide the resources your customers need to learn about fintech. Teach them what they need to know to make the most of the system. My company does that by helping our investors to view crypto assets through a traditional investment lens they already understand. You might find another way to achieve the same thing. Either way, education is essential if you want to secure growth.

No matter how you look at it, it is not the easiest time to be in the fintech industry. But just because the sector is consolidating, it doesn’t mean that there’s no room for growth. With the right approach, now could be the time for you to cement your business’ place within the sector.

BY Matic Jug, Head of Growth at ICONOMI

Matic Jug is a growth-driven marketing strategist with a deep passion for crypto and digital innovation. As Head of Growth at ICONOMI, he plays a key role in expanding one of the leading crypto portfolio management platforms, helping bridge the gap between traditional and digital finance.

  Fintech, Marketing, Opinion Piece