A fintech company may plan for a predicted pace of growth. Exploding interest in the company’s offerings or a sudden influx of new customers, can send even the best-laid plans out the window.
To scale effectively, a fintech company needs not only to target and address its pain points. It also needs to keep existing functionality available for its expanding group of newly interested customers.
To meet this goal, these companies need to focus on data management, customer availability and automating certain key processes.
Data Management Processes That Keep Pace With Growth
Rapid scaling can present a host of problems. Yet it also offers opportunities to embrace new customers and to meet customer demand where it is, rather than where it is projected to be. That’s why a focus on data management is a must.
“In all my research into financial services innovation one trend stands out above any other: it’s all about the data,” writes Sarah Bateman, technical architect at Altus Consulting. Analyzing data and acting on insights produced is a major concern for fintech companies.
Ironically enough, translating data into insight is a challenge for many fintech and financial organizations. “Legacy architectures simply don’t provide the agility and flexibility needed to prepare data effectively for analytics and increasingly, machine learning,” says John Kain, who leads the worldwide capital markets business development team at Amazon Web Services.
Scaling a fintech company’s operations to meet exploding customer demand often means scaling the company’s ability to store, protect and analyze data.
Effective scaling supports other pursuits, as well, such as maintaining legal and regulatory compliance, writes Natalie Luu, a VC partner at Lightspeed. Inefficient payments systems and similar tools can undermine both a fintech company’s ability to stay compliant with current rules and its ability to provide quality service and support to its customers.
Yet the practical challenges of scaling a fintech company can prove daunting. Often, fast-growing tech startups don’t have the resources to leverage the data they collect, or they don’t yet know which data points are most relevant to their missions and further growth, says Ben Murray, CFO at Mobile Solutions.
Rapid growth can rapidly destabilize a fintech company that’s narrowly focused on survival. While a sharp increase in customer interest is a good thing to have, it also demands a change in perspective to ensure that customers receive the services they expect while the company expands its own capabilities.
Deference for Their Customer Relationships
Subscriptions are the lifeblood of any SaaS business, a category that most fintech scaleups fall under.
“Under subscription models, the business model shifts to longer-term customer relationships,” David Appel and Brian Dietz write at the Wipfli blog. “That initial sales stage is still critical, but customer retention and expansion become equally essential parts of the operation.”
An influx of new customers can be exciting, but it also creates new pressures to build and maintain relationships while also scaling to meet that sudden increase in demand.
For rapidly growing fintech companies, data analysis has profound implications for customer satisfaction. Yet the ability to glean actionable insights from collected data remains one of the largest challenges for young companies.
Demand for data storage, protection and analysis tools increases as customers’ engagement with the platform increases. Growing fintech companies can thus find themselves struggling to manage, let alone understand, the massive volumes of data an influx of new customers brings.
At first, “new FinTech entrants will initially suffer from small scale,” write Giorgio Barba Navaretti, Goacomo Calzolari and Alberto Franco Pozzolo, editors of “Fintech and Banking: Friends or Foes?” A rapid increase in customers or clients, however, creates a different problem: How to manage, protect and analyze data for improved insights will also serve customers’ needs in real time.
In the race to scale, fintech companies can find an ally in their customers, who embrace technology precisely because they understand it can grow and change to meet new challenges. Customers look to tech innovators not only to create new options for handling financial tasks, but to shape the direction of that innovation, says Boyce Adams Jr., Senior Vice President of Financial Services at AvidXchange.
Customers increasingly seek personalization, and a fintech company with a commitment to managing data at scale is well-suited to provide it.
“Banking is still about people and relationships,” says Adam Preedy, manager of EMEA sales engineering at SS&C Intralinks. “Those that succeed in creating a personal, seamless and enhanced user experience will be well placed to meet the demands of the future.”
A Bias Toward Process Automation
Fintech companies’ process automation strategies set them apart from traditional banks, writes Katharine Marais at Workato. Customers often embrace fintech tools precisely because automation enables the company to offer a customer experience that established banks don’t offer.
Maintaining and improving automated processes, then, helps fintech companies build relationships with new customers in a time of rapid growth.
Meeting Customer Expectations With Automated Data Feeds
Both fintech companies and customers are poised to embrace the world of financial feeds, predicts Ron Shevlin, managing director of fintech research at Cornerstone Advisors. Like a social media feed, a financial feed incorporates information, tips and communications from a customer’s various financial institutions, accounts and the like into a single source for financial information. A financial feed offers a snapshot for the customer of their financial status in real time.
Whether a fintech seeks to provide this kind of comprehensive financial feed or to offer a more circumscribed view of a customer’s status, automating digital feeds plays a key role in effective scaling. Automated feeds allow customers to access their information and stay up to date on changes as they are implemented.
Improving Service With Automated Reconciliation
Reconciliation remains a labor-intensive activity for organizations that deal with finances. Even those that have embraced certain tools to automate the process still find themselves engaging manually with the reconciliation process, writes Gary Waylett, CEO of the Eclipse Group.
“Even in companies where workflow software exists, the process is often fragmented: data may be siloed, backward-looking, or lacking context; systems don’t sync,” notes Seema Amble, fintech deal partner at Andreessen Horowitz. “This perpetual state of clunkiness isn’t simply frustrating, it’s a pervasive problem that directly impacts business decisions.”
It also affects a fintech’s ability to provide a seamless, satisfying experience for customers while scaling up and remaining compliant with regulations and accounting standards. Getting tripped up with reconciliation would both be a red flag for regulators and undermine customer trust in the company’s data.
Tools like robotic process automation (RPA) can help improve reconciliation. “RPA performs some very specific tasks well, like extracting information from a legacy system on a mainframe,” Marais writes.
Effectively automating these processes can help fintech companies focus on the scaling issue of the moment, confident that the information customers need will be available when they call for it.
Automate Customer Onboarding
In a period of rapid growth, automated customer onboarding can help fintech teams meet demand while also attending to the core tasks of expansion.
A December 2019 white paper by WorkFusion found that half of the time and cost of financial customer onboarding is spent on just 5 percent of the steps in the onboarding process. Fintech companies can often reduce the amount of onboarding time as compared to legacy banks. The flexibility of automated onboarding can further reduce the time the customer spends creating an account or getting more information, which further boosts customers’ perceptions of the product.
A shorter, simpler onboarding process is more appealing to customers; handled effectively, it can also make data easier to manage, protect and analyze, as well. When customer onboarding is automated within a system that also analyzes new customer data for relevant insights, onboarding allows fintech companies to provide a better customer experience, writes Jeevan Babu, senior project manager at Fortunesoft IT Innovations.
Automation can streamline onboarding, de-silo data for better personalization and flow, and improve both the customer’s experience and the company’s ability to execute on its core promises.
Sudden growth is a good problem to have, but it is still a problem. By deploying automation effectively and placing the customer relationship first, a rapidly growing fintech company can build strong customer relationships while it scales up its offerings.
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