In the world of fintech startups it has never been easier to conceive a clever solution to a consumer problem and execute it by raising early stage finance and building the dream.

In some cases these young businesses go on to some considerable success by attracting customers and raising further finance. But what lies beneath may not be as much as a threat to the status quo as the slick marketing and digital designs might have us believe.

By using some well-established growth hacking techniques and therefore achieving a significantly lower Customer Acquisition Cost (CAC) than many more established companies are used to, early stage fintechs can achieve huge growth in users early on, and in a world where data is being touted as ‘the new oil’ Venture Capital continues to flood into the space.

“Ideas are cheap; execution is everything” – Chris Sacca, Investor in Twitter & Uber

As the market matures it has become apparent that sustaining that growth and keeping a healthy balance between CAC and Lifetime Value (LTV) is not as simple as implementing a few neat viral mechanics into your customer experience. Look no further than the news coming from Monzo and Nutmeg, for example.

Although early adopters of these services seem happy to download an app and create an account, there appears to be some problems with ongoing engagement and therefore value being generated for the businesses. Fintechs seem to be struggling to maintain their very impressive early momentum.


Digital disruptors: who’s in the mix?

revolut card and app

Revolut

Virtual disposable cash cards eliminate fraud

March 2018 saw UK-based fintech company Revolut launch virtual, disposable cash cards in an attempt to reduce fraud. Based on a user’s existing cash card, Revolut generates a disposable card with new details appearing in the app. After making an online payment the disposable card is disabled, meaning the website can’t store payment details and can make no further charges. The disposable cards will not work for subscriptions. Physical Revolut cards are available for £5, and customers can have up to five.

clarity money screen app

Clarity Money

Personal finance app helps users manage their money

Clarity Money is a personal finance app that enables users to cancel subscriptions and manage credit by offering a credit card to consolidate debt and provide the best card for a particular type of consumer. The US-based company also identifies bills that are negotiable and provides a service that automatically renegotiates for a lower rate. In September 2017, the brand announced it had reached 500,000 users since its iOS launch in January 2017, and had analysed over $600 billion in transactions, saving users more than $300 each.

monzo app

Monzo

Digital bank connects to automated apps and services

From June 2018, Monzo customers can integrate their account with If This Then That (IFTTT). The UK-based digital bank’s customers can connect their account to various services and apps, by creating personalised rules which are automatically triggered by real-world events. Users could, for example, add a track to a Spotify playlist when they spend at a specific store, reward themselves financially each time they visit the gym, or add funds to a savings account each time their football team scores a goal. IFTTT works with more than 600 services including Twitter, Instagram and Alexa.


Learning from the lean

With so many long-established big name and high street brands having their markets disrupted, their brand equity (and ultimately trust) endures, meaning that the threat from fintechs might not quite live up to the hype.

Having said that, what is often a very apparent chink in the incumbents’ armour is the UX of their onboarding process. In some recent user testing we found a huge drop off in a sign-up process because of poor UX, which was mainly down to lack of signposting and instructions. These are not hard problems to solve, but it’s a common issue across the industry. As the saying goes, no point pouring water into a leaky bucket.

Given the large and well-funded growth and product teams that exist in many fintechs, it would be no surprise if they find ways to overcome the challenges they face, but there are lessons to learn for some of the more established businesses.

In summary, here’s three takeaways that will help you to preserve and take back market share:

  1. Substance trumps style

If your product is solving a genuine consumer need, and in a sustainable and profitable way for the business, then investing in and improving your acquisition and retention metrics will see positive ROI.

  1. Make it easy

One thing that fintechs trump many incumbents on is the ease with which customers can create accounts and start saving. Improving the UX of the onboarding process is very important when competing in this space.

  1. Growth hacking isn’t just for startups

By using some of the tricks of the trade that tech startups have been experimenting with and optimising in recent years, it’s possible to significantly reduce CAC and maximise LTV.

If you’re interested in learning more about trends affecting the financial services industry, download our full guide here: Financial Services Trend Report. Or alternatively, contact Jack Thompson on 0117 9270100 or jack.thompson@saintnicks.uk.com.