Growing fintech companies typically put their customers first. Technology develops alongside, and in support of, the growing customer base.
Sudden, rapid customer growth can be heartening, but it can also cause friction. The tech stack and the strategies responsible for one stage of growth are often not ideal for the next stage of growth — nor for the user experience expectations new customers arrive with.
When those expectations outpace technological development, the company will need help to bring its software platform in line with growing demand.
Fintech companies can plan their responses to sudden growth with attention to several key details.
Data Security During a Growth Boom
“At its heart, banking is based on trust,” writes Josh Bottomley, global head of digital at HSBC. “While customers often want banking services to be modern and responsive, they also want to be certain that their money and their information are safe.”
The fintech sector grew rapidly prior to 2020, and the events of 2020 merely accelerated its growth. Rapid growth, however, demands the expansion of security in order to maintain the fundamental trust between fintech companies and their users.
“While fintech adoption might be spurred by convenience or necessity of late, keeping it mainstream requires a renewed focus on security awareness tailored for these platforms,” writes Jordan Blake, vice president of product management at behavioral biometrics platform BehavioSec.
Balancing Data Security With Customer Access
Whether it’s making online payments or purchasing insurance, customers embrace fintech products because those tools simplify financial management.
Yet ease of access can be at odds with security. Balancing the customer experience with data security requires skill. Many customers seek both security and accessibility from online financial services, and they gravitate toward the options that provide both at once.
Addressing Legal and Regulatory Change
Because laws and regulations deal with the world as it is, they often lag behind technological innovation and fail to anticipate change. Current U.S. regulations concerning online banking and related services were written in response to technology that is becoming obsolete.
The state of these rules thus “raises questions concerning whether the existing legal and regulatory frameworks, when applied to fintech, effectively protect against harm without unduly hindering beneficial technologies’ development,” writes David W. Perkins, specialist in macroeconomic policy at Congressional Research Service.
Keeping applicable laws and regulations in mind when planning a software expansion can help banks and related institutions remain compliant while still providing the cutting-edge technology and support that customers expect.
Staying Online While Software Upgrades
Neither customers nor fintech companies can afford for an application to be down for even a day. Both parties need the fintech company’s services to remain functional and accessible while the work to expand or upgrade software proceeds.
The need for responsiveness isn’t unique to fintech. Laws and regulations in many jurisdictions require companies that handle financial information to be able to access their computer systems on-demand, especially when time-sensitive issues such as risk are involved, writes Rajiv Jain, executive technology strategist for CDW.
To improve service delivery while also implementing expansions or upgrades, fintech companies can explore several options. These include containerizing critical apps so that they can be deployed within any cloud framework. Partnering with the right tech organization or DevOps team is essential, as well.
Having a well-defined timeline with clear milestones, deliverables and predictable outcomes can make or break a software upgrade or expansion, particularly when time is of the essence. When choosing a partner for a technology installation, expansion or upgrade, discussions about timelines and milestones are a must.
Today, it’s common for fintech companies and established institutions to collaborate with one another, writes William Morales, founder of FinTechtris. These collaborations demand close attention to goal-setting and timelines to ensure that services can be provided to customers without disruption.
“The framework for a successful FinTech partnership with banks involves strong alignment in strategic goal / plan, establishing common ground, building and scaling the joint venture, and implementing success metrics for the partnership,” writes Morales.
Timing Growth Decisions
Some events offer a clear starting point for digital growth. The COVID-19 pandemic, for example, closed physical bank and store locations, forcing some customers’ banking lives online. Demand for online payment processing grew rapidly, too, creating challenges for businesses and banks whose customer bases expanded beyond their technological capacities, notes Aaron Press, research director for worldwide payment strategies at International Data Corp.
In Europe, the use of financial apps jumped 72 percent in the first week of coronavirus lockdowns, according to a March 2020 study by deVere Group. Inquiries from financial organizations seeking to adopt new technologies also increased, says James Green, divisional manager for Europe at deVere Group.
John Schaub, director of special projects at Central 1 Credit Union, says the Canadian financial institution often opens conversations with fintech partners when it wants to offer a new product or service, but cannot develop the tech in-house in a cost-efficient or timely manner.
Banks often turn to fintech companies because those companies specialize in innovation. A fintech company can develop or deploy the software needed to address a customer need. Often, the bank recognizes that software offers an answer, but it lacks the expertise to develop those tools. By providing the right tools, fintech companies can expand their own customer bases by building the software that those banking customers need.
Scaling up digital offerings has become a promising pathway to growth and efficiency for many mid-size banks, says Ron Shevlin, director of research at Cornerstone Advisors. Organizations that focus on growth via automation may gain an edge over their competitors, since overall movement in this area is slow, according to a Cornerstone report.
To expand offerings while maintaining security and stability, the right partnership is a must.
“‘Collaboration’ is a rational response from market players seeking to address market scale quickly — or conversely, test and access tech quicker than they could otherwise develop,” says Alex Bannister, director of strategic partnering at Nationwide Building Society in the U.K.
With the right planning and attention to key details, fintech companies can respond promptly to sudden leaps in customer interest, thereby providing essential services and assistance while also growing to accommodate a larger customer base.
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