Fintech growth over the last five years has been exponential, with investment in UK fintech hitting £27.5 bn in 2021 – but the high reward also means high risk.
Avoiding risk or mistakes is impossible.
As a fintech founder and CEO, I know this well – but the race to win can be made easier if fintechs embrace change and avoid the mistakes of legacy institutions.
Standing on the shoulders of giants and embracing the lessons that can be learned from those who have come before is crucial to the future success of our industry.
Technology is at the core of the new wave of fintechs.
The rise of embedded payments platforms, online banking, and digital and contactless payments, including new alternative payment types like cryptocurrency, is not likely to stop anytime soon.
This technology exists to solve the issues of legacy systems, in many cases replacing the traditional retail and merchant experience.
Fintech players have a huge advantage in that they are not tied down to legacy systems or processes like established players.
However, they may be at risk of wasting it.
Recent headlines report a rise in hiring freezes and redundancies, prompting many to believe that the fintech bubble is bursting.
To make the most of the advantages on offer, fintechs must collaborate and embrace change.
After all, the race to win in the fintech arena is more of a team sport than an individual one.
Avoid legacy institutions’ mistakes
Collaboration will lead everyone down the path to success.
Fintechs rely on established banking infrastructure to be able to run and operate legally, yet, to date, many legacy institutions have been standoffish and reluctant to work closely with new market entrants.
Fintechs must avoid this legacy mistake and foster a spirit of collaboration with established players.
It’s no secret that banks can greatly benefit from fintech technology to stay innovative and relevant amid rapidly evolving consumer expectations.
Fintechs can also build stronger trust with users and benefit from established players’ extensive security measures.
When this collaboration is viewed as a team sport, we can leverage what possibilities are possible and build a win-win environment.
Collaboration shouldn’t just be between banks and fintechs; fintechs must also collaborate together and support other fintechs.
In a market that is growing quickly, successful firms must adopt the mindset that other fintechs are more friends than foes.
Supporting and enabling other companies to grow not only promotes and fosters innovation but also allows for companies to be seen as a dominant force in the banking and tech sectors.
For example, 3S Money’s recent sponsorship of a femtech startup accelerator provides entrepreneurs in the femtech sector, who have historically been underfunded, access to a grant to help support getting their business off the ground.
Embrace change over innovation
Every Fintech strives to bring the most successful services to market but fintechs should embrace the change necessary to navigate the banking sector, rather than focusing only on innovation.
This isn’t to say innovation should be discarded – quite the opposite!
Paying close attention to the external changes in the sector is key to ensuring fintechs do not waste their advantage.
One way this can be done is through hiring and retaining top talent.
Good fintech leaders need to realise that investing in talent retention will organically lead to more successful services being launched to the market.
Many companies couldn’t have achieved the milestones that they did without having invested in senior hires and betting on the right people.
Fintech is at the forefront of solving issues that legacy institutions haven’t been able to.
Fintechs are advantageous to banks as they allow them to stay relevant and innovative to consumers.
Yet, fintech founders need to be so careful to not waste this opportunity by being too competitive.
Ultimately, it’s collaboration that will see us all succeed – for our customers, for our employees, and as an industry.
Incoterms – All you need to know
The Incoterms are a series of pre-defined commercial terms designed to help prevent confusion in foreign trade contracts by clarifying the obligations of buyers and sellers.
While they are in heavy use today, their origin dates back to the early 20th century.