How Customers Are at the Center of FinTech Innovations

Gone are the days when digitizing your FinTech startup was considered an innovation unto itself. Having a website or app and enabling digital transactions is no longer considered an innovation— it's more like a necessity for survival. 

FinTech firms that want to stay ahead of the curve have to look deeper into their business model to find new ways to innovate beyond simply integrating new technology. 

So how do you innovate your FinTech startup in an era of digitization? The key is to understand your customers and adopt a customer-centric approach for your entire business. 

Be a creator, not a disruptor 

Many entrepreneurs are still stuck on the old idea that the only way to generate new business is to disrupt an existing market. But that isn't exactly true. 

Nondisruptive creation allows you to create new market segments where there weren't any. That way, you can build a new market for your business without destroying an existing player or running anyone out of their jobs. You can find better and lower-cost ways to solve existing problems and align your company goals with your customer. 

But to be a creator, you need to understand your customer base truly. You need to be aware of their exact pain points and innovate not just for the sake of innovation but also to make their lives easier. 

Let's look at an example. Hometap is a startup that allows homeowners to access a portion of their property's future value in cash. Homeowners can access capital without selling their property to fund immediate needs such as healthcare expenses. 

It's a great example of a FinTech startup creating a new market segment by solving an existing problem in a new way. 

There are many more examples of FinTech providers taking on the role of a creator instead of a disruptor. If there's one thing they all have in common, it's an acute knowledge of their customer base and market segment. 

No more product-led 

You're probably familiar with the concept of product-led growth. Starting with Salesforce in the early 2000s and continued by Slack and Dropbox, numerous software companies have pivoted to a product-centric business model. 

Unlike the sales-led growth strategy of the '80s and '90s, the product-centric business model's entire customer lifecycle from acquisition to retention is defined by the product itself. 

Today, there's an even better option— customer-led growth. Allowing customer needs to define your business model results in a better product that's already tied to the requirements of an existing market segment. 

This approach allows startups to serve a particular customer segment based on a deep understanding of their unique pain points. It means you can innovate the market without disrupting the existing market while still delivering value in a way that matters. 

In FinTech, we're already seeing customer-first solutions taking off everywhere, from banking to cryptocurrency. 

Digital and mobile-first banking 

In most Asian countries, banks have been moving toward digitization long before the pandemic came to be. However, the push toward social distancing and the need to get everything done remotely has accelerated the shift to mobile banking. 

Today, people prioritize convenience and ease of access over traditional factors like interest rates, to the extent that a 2021 McKinsey report demonstrated that more than 70 percent of Singaporean consumers are open to migrating to digital-first banks. 

Banks have had to adapt to keep up with the competition, and they were quick to introduce full-fledged online banking solutions. Throughout 2022, we will continue to see banks refine their digital offering through more cutting-edge and mobile-first banking solutions. 

Hybrid solutions in FinTech 

We are also starting to see the boundaries between banks and other personal financial institutions blur. From investment cards to smart deposits and so many more, banks diversify their portfolio of services beyond the traditional remits, often in partnership with other financial institutions. 

Hybrid FinTech solutions deliver more value to their customer base, which helps the companies themselves grow even further. As more banks hop aboard the digital bandwagon, we expect to see a further rise in the number of bank-FinTech hybrids going into the new year. 

There are even more significant opportunities for growth, as consumers expect banks and FinTech startups also to provide non-financial services that help make their lives easier. 

Social engagement in FinTech 

From a consumer's perspective, digital banks are utility apps. They are useful financial tools, but there's little to no engagement involved in the service to make people feel attached. Simply put, there's nothing stopping customers from switching from one digital bank to another. 

Adding a little touch of interaction to make it social+ can change this. From PayTM in India to Venmo in the US, social+ FinTech had a great year in 2021. 

But what really is social+? Simply put, it's a strategy that turns social engagement into an inextricable part of your product — so much so that the success of your business community is directly linked to the success of the product itself. 

The benefits of this business model are quite overwhelming. The need to belong to a community is primal among human beings, which is why social+ brands have experienced massive growth fuelled by increased user engagement and user retention. 

The social+ model also unlocks new ways to approach data and personalization, making it a gold mine for a brand's marketing strategy. 

We expect to see many more companies hop onboard the social+ train in FinTech going into 2022, and the impacts are poised to be glorious. 

Engaged customers will help you to innovate 

The social+ approach isn't just about slapping some social features to your existing product. Instead, it implies the implementation and integration of community-building into your product from day one in a way that delivers value to your customer base. 

From in-app communication via emojis to competitive leaderboards and rewards, social+ can help gamify FinTech and make it more attractive to the customer base. This, in turn, will help drive higher rates of user engagement. 

Unlock the power of social engagement and cement that feeling of belonging that we all crave into your FinTech service. 

This article was written by Sanghee Lee from e27 and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to legal@industrydive.com.