Navigating the Changing Financial Services Landscape: A Look at Fintechs Strategies & Mistakes

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Just as the fintech revolution is bringing new methods of technology to the financial services industry in every aspect, every step of the way, banks are taking hints from fintech companies and attempting to apply them to their own strategies or revenue models. Some take drastic measures, such as completely changing their core revenue model, while others choose to focus on small business lending or cutting transaction fees. In fact, many traditional (i.e. non-technology) banks these days are also running their own fintech initiatives. And with good reason: as it turns out, fintech isn't a silver bullet to solve every problem.

A one-size-fits-all strategy is risky, but that is often the route many banks have taken which left the market ripe for the taking. In an effort to appeal to all types of customers, they lost the plot. In this article, we'll examine the contender for the financial sector heavyweight championship along with a few of their biggest mistakes. We'll also provide some examples of how fintech startups are only partially succeeding in "disrupting" the status quo and where they are going wrong giving banks the opportunity to take back retail banking.

I want to contrast the strategies and mistakes of fintech so you can see how the industry will be handling the next financial revolution, and in the next installment, we are going to tackle banks. They have their own thrashing from yours truly coming for them in the next edition

So my fintech clients, don't go and cancel our contract yet. Yes! I am choosing vawlence today, but it comes from love

Quick housekeeping, we continue the conversation from where we left off, and if you are new to the house, start here to grasp the full gist as this is part 2 on Fintech vs Traditional Banks: David vs Goliath.

So, when it comes to the world of finance, fintech companies are often touted as the scrappy upstarts taking on the dinosaur banks. But is it really a fair fight? The truth is, while fintech may have some tricks up its sleeve, there are still a few obstacles standing in the way of a true David and Goliath showdown.

First of all, let's talk about the elephant in the room: regulation. Fintech companies have to navigate a labyrinth of rules and regulations, which can be costly and time-consuming. It's like trying to win a race with one hand tied behind your back. Meanwhile, the banks have teams of lawyers and compliance officers on speed dial. Sure, it's not as exciting as developing the next big app, but it's a necessary evil. And most Fintech founders know too well how banks are prepared to fight to the death in a court of law to defend their turf.

And speaking of necessary evils, let's talk about risk management. Banks have had decades to build up their risk management infrastructure and let's face it, they've had plenty of practice dealing with crises. Fintech companies, on the other hand, are still relatively new and untested. It's like trying to fight a heavyweight champion with a pair of foam nunchucks. Not exactly a pretty picture

But perhaps the biggest disadvantage fintech companies face is the lack of trust and adoption. Many consumers and businesses may be hesitant to entrust their financial information and transactions to a relatively new and untested company. It's like trying to convince your grandma to use PayPal instead of keeping their money in the bank. Sure, it's faster and more convenient, but will she ever trust it? I mean I remember my late Grandfather whenever his properties will pay him their rent, he would go and withdraw the money and put it in his faithful bag under the bed. In developing nations like on the African continents, banks already struggle with gaining trust, now picture the horror of most trusting their money with an institution they cannot walk into.

I remember doing some research for a fintech project we are to take on, and interviewing a Nigerian gentleman in Johannesburg, and when asked how he sent money home, he pointed to using an agent, even though there are current solutions in place. When asked what was the largest sum of money he ever transferred, It was around ZAR150000, which in today's conversion rates would be well over USD$8000, and when I continued to probe as to why he didn't use fintech solutions at hand, he said he knew where his agent stays and what if the fintech folded on the day he put his money in it. FTX anyone?

So, trust is something that fintechs have not necessarily done enough to develop, and looking at the marketing landscape of most fintech solutions in Africa particularly, not enough is being done to cultivate it, which means banks that learn from fintechs can easily tap into that unaddressed market segment.

Oh! and let's not forget about building long-term relationships with customers. Banks have had decades to build trust and loyalty with their customers. It's like trying to steal someone's significant other. Sure, you may be able to offer them a better deal or a more modern app, but they've already committed to the relationship.

So, let's discuss what Fintechs have got going for them as well as the mistakes they are making. Hey! I know you are thinking Tanya, I thought that you are on the Davids' side of Industries. I am! But we need to have these honest discussions though

1. Fintech: The Little Engine That Could (And Did) Take Over the Financial Sector

As a fintech product user myself, I have to say, I am thoroughly impressed with the ways these companies have managed to gain an unfair advantage in the financial market. And by "unfair advantage," I mean they're just plain better.

First of all, there's the whole digital and mobile-first experience thing. I mean, who wants to go to a physical bank and talk to a teller when you can just open an app and transfer money with a few clicks? It's like comparing a horse-drawn carriage to a Tesla. No contest.

But it's not just about convenience, it's about data and analytics too. Fintech companies have been able to gain insights into customer behavior and preferences that traditional financial institutions could only dream of. It's like they have a crystal ball that tells them exactly what I want and need.

Oh! And let's not forget about automation. Fintech companies have been able to automate so many financial processes, like account opening and loan underwriting, making them more efficient and cost-effective. It's like they have a team of robots working 24/7 to make my life easier.

But perhaps the most impressive thing about fintech companies is their ability to lower barriers to entry. They've been able to offer services to underserved or unserved segments of the population, like those without access to traditional banking services. It's like they're superheroes, swooping in to save the day for those in need.

Oh yeah! There is that thing called innovation. Fintech companies have been able to create new financial products and services that traditional financial companies just can't replicate. It's like they're constantly coming up with new and exciting ways to make my money work for me.

Finally, there's the speed factor. My millennial self and patience aren't exactly the best of friends, the whole microwave generation thing. Fintech companies are able to move faster than traditional financial companies, allowing them to quickly adapt to new market conditions and take advantage of new opportunities. It's like they're on steroids or something. That good kind of steroid though (If there is such a thing)

All in all, as a fintech product user, I have to say I am thoroughly impressed with the ways these companies have managed to gain an unfair advantage in the financial market. And by "unfair advantage," I mean they're just plain better. So, yeah traditional financial institutions out there, you better step up your game because they are packing a mean punch.

2. Why Fintech Companies Are Falling Short: A User and Marketer's Perspective

As a fintech product user and marketer, I've seen firsthand the mistakes that are preventing fintech companies from totally taking over the financial sector.

First and foremost, many fintech companies are failing to truly understand their target audience. They assume that all millennials and Gen Zers want the same thing, but let me tell you, we're a diverse group with diverse financial needs. By not truly understanding whom they're marketing to, fintech companies are missing out on potential customers. There is more to customers than bundling us up by demographics

Another mistake fintech companies are making is thinking that a flashy app or website is all it takes to win customers. Sure, a sleek design is nice, but it's not enough. Fintech companies need to focus on providing real value to their customers, whether that be through lower fees, better investment options, or improved financial education. A former client at a time was looking at leveraging lending fintechs in West Africa, upon comparison, traditional banks' terms and interests were far more favorable. These platforms' terms could have easily been referred to as modern-day loan sharks. I think you can safely deduce that he didn't become their client.

And let's talk about security. As a fintech product user, I want to know that my personal and financial information is safe. Yet, it seems like every other day there's a news story about a fintech company experiencing a data breach, or that your money has completely disappeared...*cough* FTX. This not only harms the company's reputation, but it also makes customers question the security of all fintech companies.

Lastly, fintech companies need to realize that they're not just competing with traditional banks and financial institutions, but also with each other. The market is becoming increasingly saturated, and in order to stand out, fintech companies need to offer something truly unique and valuable to customers. This whole "me too" products offered and copycat marketing that you guys have going on is really exhausting. I could take 10 fintech websites, remove the logos and names on the copy, and show it to a number of people, yourselves included, and they wouldn't be able to tell it apart, nor would you.

I mean, is it too much to ask that you invest in a little innovation in your marketing, as you do in your product development? Because boy! do y'all sound alike. PSSS...I got you though, stop over to my channel to understand the concept of Demand Generation

In conclusion, fintech companies need to focus on truly understanding their target audience, providing real value, prioritizing security, and differentiating themselves in a crowded market if they want to totally take over the financial sector. And if they don't, well, I guess we'll just have to stick with the big banks for a little longer. Ultimately, we see fintech startups as excellent sparring partners in the financial sector. We've seen how banks are able to absorb some of their best practices and technologies. So, is it really an unfair fight? Perhaps not. Fintech companies may have some tricks up their sleeves, but they still have a long way to go before they can truly take on the banks. But hey, that's not to say they can't make a dent in the market and offer customers some great options. So, let the games begin!

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About the author

Tanya Kabuya is a Business and Marketing strategist who works with people of influence such as?speakers, coaches, entrepreneurs, authors, consultants, and SMBs to amplify their marketing?message and increase their impact while remaining true to their core.?Her work centers around leveraging content & social media to create a client acquisition system that attracts premium clients and opportunities.?She is the Founder & CEO of Wizz Digital, a digital company & remote first that aims to equip consulting firms & Startups with the skills to market and sell their services with ease. Book a?consultation here?if you require assistance

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