First of all, let’s talk about the definitions. While a few years ago, there was a large gap between traditional financial institutions and emerging fintech, the delineation between the two is becoming increasingly blurred. I’d argue that every company in financial services is now, to some degree, a fintech. 

Changes in hiring patterns within the financial sector reflect an accelerating digitalisation. Here are a couple of examples. In 2020, one-third of all advertised job vacancies in UK banks were tech-related, up from 23% in 2017. JP Morgan invests over $12bn annually in technology and employs 50,000 technologists.  

Fintech valuations are looking exceptionally sexy. According to Pitchbook, median revenue multiples for VC-backed fintech companies in Q3 2021 have reached 21.7x, the highest ever. It reflects both the hotness of the market and the high-growth, highly scalable models pursued by VC-funded fintech companies. Growth and traction are handsomely rewarded.

Many founders with business and finance backgrounds, particularly those that come into fintech from corporates and large financial institutions, often struggle with building high-growth models, where product and sales and marketing are repeatable and scalable. I came into the world of startups and growth companies after 10+ years in investment banking and struggled with these biases. 

Everyone is busy. So let’s start with five things you should stop doing if you want to achieve 100% growth. 

These are the biases and blind spots that founders with corporate and finance backgrounds are likely to face:

1. Overcooking the initial solution 

A client has problems to solve. You want to solve all of them at once. Instead, you should focus on solving the most significant issue. Try to find a well-defined, most immediate need, and design a solution to address it. Otherwise, you may face a creeping scope, a prominent developer bill, and even running out of investor money before any significant milestone is hit. Five clients buying the same (limited) solution are much more attractive to a VC than one bespoke client with a creeping scope. 

2. Unnecessary complexity

Financiers are not afraid of complex concepts and solutions and often welcome complexity. However, it often doesn't translate well into fintech. We see many fintech products where clients are so overwhelmed with features that it kills the adoption. Simplicity is why many of our clients and we prefer HubSpot as their sales and marketing suite to Salesforce or Microsoft Dynamics.

3. Bespoke solutions

There is nothing wrong with going bespoke if you have a consulting model. However, this model will be limiting while pursuing high growth, scalability, and external investor funding. Some bespoke element is acceptable if you are striking a multi-year large-scale partnership as part of your B2B2C channel strategy. However, make sure the partner pays you for executing the additional scope. 

4. Inward focus in communications.

Building a company is exciting. However, the outside world might not share your excitement about a new tech partnership or the latest investment round. But they will sit up and listen if you tell them how you can halve their payment cost, make onboarding of their clients easier, or give them a market insight that would help generate higher returns. Gather factual evidence that measures your impact as early in your business journey as possible, and it would do magic to the company’s valuation both in private and public markets, as it would create a solid foundation for your acquisition and retention. 

5. Excessive formality in product and communications.

All of us have been conditioned by the simplicity of leading B2C products and applications such as Apple, Netflix and Tinder. We expect similar usability and customer experience standards from B2B and B2C fintech products. The subject might be dry, but we expect it to look great, be easy to use without a 100-page manual, and the language to be free of excessive jargon while remaining precise and compliant with regulations. 

At Engelworks, a combination of both solid entrepreneurial backgrounds of growing and exiting fast-growing companies and domain expertise in finance has helped us overcome these biases when we design and execute growth blueprints for our businesses and clients.

In our next blog post and the upcoming eBook, we’ll talk about the key things to START doing to achieve 100% growth in fintech. 

If you would like to chat about your fintech businesses, and your growth ambitions and swap some war stories, please don't hesitate to get in touch with us.

Carl Engelmarc