How do you calculate fintech ROI?

2 How to calculate fintech ROI?

The basic formula for calculating fintech ROI is: ROI = (Net Benefits - Total Costs) / Total Costs x 100% Net benefits are the positive outcomes or results of your fintech solution, such as increased revenue, reduced costs, improved customer satisfaction, or enhanced compliance. Total costs are the negative outcomes or expenses of your fintech solution, such as development, maintenance, integration, or licensing fees. To calculate fintech ROI, you need to identify, quantify, and compare these two components.

3 What are the challenges of calculating fintech ROI?

Calculating fintech ROI is not always straightforward or simple. There are some challenges and limitations to consider, such as data quality and availability, attribution and causality, and time horizon and discount rate. Reliable and accurate data is necessary to measure the net benefits and total costs of your fintech solution, but this data may be incomplete, inconsistent, or outdated. Additionally, you need to isolate and attribute the net benefits and total costs of your fintech solution to your fintech solution only. Lastly, the appropriate time frame and discount rate for your fintech solution will depend on the nature and scope of your fintech solution, as well as your expectations and assumptions.

4 How to overcome the challenges of calculating fintech ROI?

To calculate fintech ROI, you need to adopt best practices and strategies. This includes defining your goals and metrics, collecting and analyzing your data, and adjusting and optimizing your fintech solution. You must consider how you will source, validate, and integrate your data; how you will track, monitor, and report it; how you will test, experiment, and iterate your fintech solution; how you will identify and address any issues or gaps; and how you will enhance, scale, and sustain your fintech solution. All of these actions should be aligned with your business objectives and stakeholder expectations.

5 How to use fintech ROI to improve your business performance?

Calculating fintech ROI is not an end in itself, but a tool to help evaluate and improve business performance. With it, you can compare and contrast different fintech solutions or alternatives, such as features, functionalities, providers, or platforms. It can also be used to communicate and demonstrate the value and impact of your fintech solution to stakeholders. Moreover, it can be used to learn and improve from your fintech experience and results by identifying strengths and weaknesses, opportunities and threats, and best practices and lessons learned from your fintech solution.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?