5 Proven Financial Services Growth Tips From FinTech Leaders

The FinTech industry continues to evolve at pace, presenting both challenges and opportunities for leaders in the sector. How do the best FinTechs build and scale so fast? What are established financial institutions doing successfully to keep up? Discover top tips from FinTech leaders on the operational decisions they've made that had the most significant impact.

1. Simple Changes Matter

Many believe that big tech firms thrive because they juggle numerous projects, but if there's one takeaway from the golden age of Silicon Valley, it’s that simplicity is always the answer.

Google, for instance, has 271 products, yet advertising accounts for 80% of its revenue.

Uber's product-led growth (PLG) team made a single tweak to their app that doubled conversion rates in 2017, outperforming all other product changes that year.

There are straightforward adjustments you can make to processes that can have an exponentially larger effect than the resources required to implement them—you just need to find them.

A recent survey by Deloitte found that 77% of financial services firms are prioritising digital transformation initiatives aimed at increasing operational efficiency and reducing costs.

By adopting digital solutions, these companies are not only cutting costs but also enhancing customer experience and compliance.

For example, insurance and pension provider Aegon significantly cut their paper and print output with a single workflow change—secure email.

“This dramatic reduction in the need to print and post important paperwork is one of the key ways that financial services companies can make significant CO2 emission savings by examining their day-to-day operations. Invariably, this will mean digitising processes to create greater efficiency, security and regulatory compliance, discarding legacy ways of working which are inconsistent with net-zero targets.”

— Ronnie Taylor, Aegon’s Chief Distribution Officer

Actionable Tips:

• Identify high-impact areas: Start by looking at the significant costs in your budget or where processes are most stagnant. Your business analysts and systems teams are invaluable in this process.
• Leverage data: Use data to pinpoint inefficiencies and areas for improvement. The right changes, such as digitising paperwork and post, can lead to significant cost savings and efficiency gains.
• Ask the right questions: Regularly question the necessity and efficiency of existing processes. For instance, do you know the impact of paper and postage on your budget?

KPI and Benchmarks:

• Cost savings: Measure reductions in operational costs after implementing digital solutions, for example, a 10-15% reduction in operational costs in six months, scaling to 25% within a year.
• Efficiency gains: Track time saved in operational processes, for example, aiming for a 15-20% increase in process efficiency.

2. Customer Amid Chaos

In a time of unprecedented disruption in financial services—fluctuating regulation, challengers, technological innovation—customers can easily be forgotten. Today’s consumers are more discerning than ever.

In a constantly changing world, they want to stop reacting to events and create the life they desire.

For example, the ease of account migration has led to a surge in bank account switching, with the Current Account Switch Service (Cass) facilitating over 9.1 million switches since its launch.

Between January and March 2023, there were 341,075 current account switches marking a 73% increase compared to the year before.

This “loyalty crisis” isn't driven by cash incentives but often by service quality, with challenger banks benefitting the most.

People want assurance that companies align with their aspirations and prioritise their best interests.

McKinsey reports that companies that focus on customer experience can see revenue increases of 5% to 10% and cost reductions of 15% to 25% within two to three years.

By aligning business goals with customer needs, firms can drive growth and build lasting customer relationships.

“Get back to first principles [...]. The financial services and fintech sectors have a perception of being very complicated and difficult to thrive in without prior experience. However, every industry has its own challenges and complications. Don’t be afraid to dive into complex topics, break them down, and understand them. By taking the time to understand what a business’s goals are, who the customers are, and how the products help those customers, things quickly become clearer.

— Liza Haskell, Chief Administrative Officer, Tide

Actionable Tips:

• Customer-centric approach: Always ask questions to uncover the "why" and "how" of projects until you can clearly articulate how they will benefit customers.
• Simplify complex topics: Encourage your experts to simplify complex topics, processes, and technologies. Never shy away from being inquisitive.
• Monitor customer feedback: Regularly gather and act on customer feedback to ensure your services align with their needs and expectations.

KPI and Benchmarks:

• Customer satisfaction scores: Track changes in customer satisfaction through surveys and feedback. A minimum of 80% in customer satisfaction scores is a common benchmark.
• Customer retention rates: Measure the percentage of customers who stay with the company over a specific period, for example, targeting a retention rate of at least 90%.
• Net promoter score (NPS): Gauge customer loyalty and likelihood to recommend the service to others. Aim for an NPS of 50 or higher.

3. Leverage Artificial Intelligence

AI applications in fintech are diverse and impactful. From fraud detection to personalised financial advice, AI-driven solutions can significantly improve operational efficiency and customer satisfaction.

AI-powered chatbots and virtual assistants can provide personalised customer support, addressing queries and resolving issues promptly.

An example of this in action is the use of robo-advisors in investment management.

These AI-driven platforms analyse market data and individual investor profiles to provide personalised investment recommendations.

In the next year, Gartner predicts that 80% of customer service and support organisations will apply generative AI to improve agent productivity and customer experience.

Machine learning algorithms can also detect fraudulent activities more effectively, reducing the risk of financial losses and enhancing cybersecurity.

AI systems can analyse vast amounts of transactional data, identifying patterns and anomalies that may indicate fraudulent behaviour.

This capability is crucial in an era where cyber threats are increasingly sophisticated and pervasive.

AI can adapt to new fraud tactics, learning from each detected attempt to improve future defences.

"Artificial intelligence possesses the sophisticated power to replicate the analytical behaviour of human intelligence, as well as enable decision-making in real-time and offer predictive security notifications. Financial institutions and fintechs that continue to invest in AI-based security systems can significantly reduce digital attacks and spot suspicious activity.”

— Jane Loginova, CEO and co-founder of Radar Payments

Actionable Tips:

• Invest in talent and technology: Hire data scientists and AI specialists, integrate AI solutions into existing systems, and continuously monitor and optimise AI-driven processes.
• Focus on high-impact use cases: Prioritise AI applications that offer the most significant benefits, such as fraud detection, personalised customer support, and investment management.
• Stay updated: Keep abreast of the latest AI developments and trends to ensure your organisation remains competitive.

KPI and Benchmarks:

• Cost savings from AI: Measure reductions in operational costs attributed to AI implementation. Aim for at least 20% cost savings through AI applications.
• Fraud detection rate: Track the number of fraudulent activities detected and prevented by AI systems, for example, by aiming for a fraud detection rate improvement of 30%.
• Customer interaction efficiency: Monitor response times and resolution rates of AI-powered customer support systems. A 50% reduction in average response times is not uncommon.

4. Do Automation Right

We are witnessing a growing need for increased digital enablement for staff, with various business units competing for resources to develop automation for Full-time-equivalent (FTE)-related ROI—essentially replacing manual work with digital processes.

According to recent data, 85% of executives reported accelerating the implementation and adoption of technologies in their organisations, with 70% prioritising using technology to simplify workflows and reduce costs.

Deloitte also estimates that companies focusing on comprehensive process automation can see productivity gains of up to 40%, translating to significant competitive advantages and operational efficiencies.

However, it's essential that companies take a broader view beyond mere FTE reduction.

Focusing solely on automation to reduce manual work can overlook critical edge-case tasks performed by employees that are vital to macro-level processes.

It's crucial for business leaders to ensure that their digital enablement efforts are guided by comprehensive business insights that emphasise customer satisfaction and revenue growth.

"Employee resistance and a lack of focus on business process outcomes are the two most common pitfalls that come from relying on headcount reduction as the key business driver for automation projects. When project success is predicated on the ability to eliminate FTE, the full replacement of a person’s activities becomes the project driver rather than process improvement."

— Fabio Chesini, Senior Director Analyst, Gartner

Actionable Tips:

• Holistic approach: Analyse metrics such as resource costs, process completion rates, SLAs, and the manual time required for processes across all business units.
• Involve employees: Engage employees and experts to ensure automation addresses every edge case and design systems with enough flexibility to monitor, optimise, and adapt for continuous improvement.
• Focus on outcomes: Ensure automation initiatives are bottom-line driven and aligned with broader business goals, including customer satisfaction and revenue growth.

KPI and Benchmarks:

• Employee engagement: Measure employee satisfaction and involvement in automation projects, for example, by aiming for an 80% employee engagement rate in automation initiatives.
• Operational metrics: Monitor completion rates, SLAs, and overall productivity improvements (for example, set a goal for a 30% reduction in manual processes).

5. Embrace Collaboration and Partnerships

The fintech ecosystem is increasingly interconnected, and collaboration can be a powerful driver of growth.

By forming strategic partnerships, fintech companies can leverage the strengths of their allies to achieve more significant results than they could on their own.

These alliances can range from collaborations with other fintech firms, traditional financial institutions, or even companies in related industries.

A report by Accenture found that 89% of financial services executives believe that ecosystems and partnerships will define the future of their industry.

Such partnerships allow fintechs to expand their reach, tap into new markets, and enhance their product offerings.

For instance, a fintech company might partner with a major bank to gain access to a larger customer base while providing the bank with innovative technology solutions.

This creates a win-win situation where both parties can benefit from each other's strengths.

Moreover, collaboration fosters innovation by bringing together diverse perspectives and expertise.

When companies work together, they can co-create solutions that address complex challenges more effectively.

It also helps in sharing resources and reducing costs, making it easier to scale operations and implement new technologies.

“To use a Formula One analogy – the driver and the car are two different components with the car being built by a whole team of experts. It’s that collaborative piece, with all working together towards that common goal, being where the best results come from.”

— Alan Clay, LexisNexis

Actionable Tips:

• Establish clear communication: Ensure clear communication channels, set shared goals, and maintain transparency with partners.
• Regularly review progress: Regularly review the partnership's progress and be open to making adjustments as needed.
• Leverage diverse expertise: Utilise the diverse perspectives and expertise of partners to drive innovation and address complex challenges.

KPI and Benchmarks:

• Partnership success rate: Measure the outcomes and successes achieved through partnerships, for example, targeting a 70% penetration rate of a parter's customer base.
• Market expansion: Monitor new markets entered and customer base growth resulting from collaborations, for example, aiming for a 30% increase in market reach through partnerships.

References:

Plaid's Fintech Trends, Plaid, 2023

Main AI Benefits in Financial Services, Statista, 2023

How AI Can Drive Productivity and Value in the Financial Sector, EY, 2023

The Importance of Collaboration in Fintech: Building Partnerships to Drive Innovation, Finextra, 2023

Fintech Trends 2024, DashDevs, 2024

Top Financial Services Customer Experience Trends, Salesforce, 2023

Digital Transformation in Financial Services, Deloitte, 2023

The Journey to Customer Centricity, McKinsey, 2023

Financial Services Technology 2020 and Beyond: Embracing Disruption, PwC, 2020

Reviewed By:

Sabrina McClune, 31.07.24

Sam Kendall, 01.08.24