How do the most successful FinTechs build and scale so fast? What are established financial institutions doing to successfully keep up? Discover the top proven success tips from FinTech leaders on the operational decisions they made in 2021 that had the most significant impact.
1. Simple changes matter
Most people think that big tech firms are so successful because they do so much, but if one mantra came out of the golden age of Silicon Valley it's that "simplicity is always the answer".
Google has 271 products. Advertising accounts for 80% of its revenue. The product-led growth (PLG) team at Uber made one change to their app that doubled conversion rates in 2017, outstripping the success of every other product change made that year.
There are simple changes that can be made to processes that can have an exponentially larger effect than the resource it takes to make them.
As one example, insurance and pension provider Aegon reduced its paper and print output with one change to their system in 2021 - secure email - a simple solution to deploy, but with significant bottom-line impact.
“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.”
The secret to finding the simple changes with the potential for the biggest influence on your bottom line is in the data, in asking the right questions. Start by looking at the big chunks in your budget, or where processes stagnate the longest before moving to the next stage.
Your business analysts and systems teams are your biggest assets here. Do you know the paper and post impact on your budget?
2. Customer amid chaos
In an age of supreme disruption in the financial services - pandemics, challengers, technological innovation - customers can get left behind.
Consumers are more discerning than ever. In a world of change, they want to stop reacting to events and create the life they want.
Bank account switchers are surging with renewed ease of account migration. Close to a quarter of a million switches (248,902) took place between October and December 2021. This is 36,302 more than in Q3 2021, and 59,629 more than in Q4 2020.
What's interesting in this (what Deloitte has called a) "loyalty crisis", is that the upsurge is clearly based on service quality rather than cash incentive, with challenger banks profiting from the trend.
People want to be confident that companies match their aspirations and are looking out for their best interests.
It's easy to get swept up in a sea of technology, data and complexity but the leaders winning are those who are able to cut through that noise to surface customer-first business principles.
“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 get stuck into complex topics, pull them apart 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.
Always ask questions to get the "why" and "how" of projects until you can clearly explain to yourself how they will benefit customers.
Get your experts to break complex topics, processes and technologies down to their base parts. Never be afraid to be curious.
3. Do automation right
Before COVID-19, the need for increased digital enablement for staff was rising. The pandemic has exacerbated this pressure.
Multiple business units are vying for the resource to develop automation for Full-time-equivalent (FTE)-related ROI - essentially, to replace the manual work of individuals with digital processes.
It's important to zoom out in this situation. Garter's 2021 CIO trends report predicts that by YE22, 25% of automation business cases will fail because they are based on FTE reduction rather than customer satisfaction or new revenue. Again, business principles should come first.
Gartner's report suggests that in attempting to alleviate the manual work carried out in distinct process stages within individual business units, leaders often undervalue the way in which macro-level processes may hinge on the edge-case work that is best done by employees.
"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 driver of the project rather than process improvement."
The goal for any automation project should be bottom-line driven. Start with the metrics- cost of resource, process completion rates, SLAs and the manual time processes take to complete across all business units.
Bring employees and experts into the fold to ensure automation covers every edge case, and ensure there is enough flexibility in systems to monitor, optimise, and adapt for increasing bottom line-success.
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