Truth 1: FinTech is a huge space.
Truth 2: Consumer-centric mission.
Truth 3: MVP is a longer process… and takes a lot more capital.
Truth 4: Customer acquisitions costs are a lot higher
Truth 5: Regulators matter.
Truth 6: Responsible global ambitions.
Truth 7: FinTech is a supportive community.
These seven truths were compiled from firms and individuals in San Francisco, New York, and London involved in FinTech. Whether you are already a part of the FinTech community or are hoping to be, this article is worth reading.
We agree with the seven truths, and thought we would add our Chicago FinTech perspective to the list. We came up with 3 more:
1. Product integration is as important as the product’s capability: You just solved a major pain point in your client’s internal workflow. The return on investment of your product is clear. You’re set, right?
Financial institutions have invested substantially in their technical infrastructures and most likely your product is just one piece of the puzzle – a puzzle that is very complex. If your product does not integrate and scale within this existing infrastructure, your problem-solving product may have created a new problem for the firm – dealing with your integration. And, if the effort to add your product to the firm’s stack creates a bigger problem than it solves, whether that’s reality or perception, my answer just went from “possibly” to “never.”
Financial institutions care about meeting overall system requirements – quality, security, integration, and reliability – and external requirements from regulators and clients, which are substantial and constantly changing (see Truth 5: Regulators matter). So, how do you make your product additive to the whole? In our experience, you should learn to enjoy pilot engagements because demonstrating the viability of your technology in a client’s environment is something you will spend a lot of time doing, and it often takes longer than you expect.
2. Win with exceptional customer service, and build products that allow for it: At face value, this concept sounds straightforward. However, it is one of the most difficult challenges FinTech companies face when building their platforms.
Our business is primarily focused on B2B; however, our end product needs to account for consumer and internal stakeholder requirements. Translated: B2B2C2 who-knows-where. For example, one of our core solutions is working with asset management firms to automate communications about mutual fund performance to their clients and internal teams. That means we have to consider requirements from many different teams – investment writing, compliance, marketing, and even risk departments. Thus, it is essential for our product to be stable, flexible, and extensible enough to support complex custom configuration and secure iteration. Starting with users to help identify problems, capabilities, and constraints in the architecture and feature design process is a must.
3. Talent acquisition costs are high, but worth it: Along with truths three and four in Mr. Varma’s article – that building FinTech products can be a slower and more expensive process – so is the process and expense of hiring FinTech domain expertise. Financial services companies invest in their people – training, compensation, benefits – and thus hiring those same individuals is not going to be easy.
Narrative Science started investing early on by hiring people with domain expertise. We have individuals from Goldman Sachs, Macquarie, Accenture, Morningstar, Bloomberg, and FactSet, who combined bring decades of experience from the financial services and technology sectors. It may have been a costly investment for a start up, but it’s one that has paid off. When we conduct client win assessments, the feedback we hear most often is that while they love our technology, they also love and trust our team. And, hiring former financial services employees is happening everywhere in FinTech — look at Addepar, Betterment, ClauseMatch, just to name a few.
Knowing your customer really matters, and it helps to hire people who were the customer in a prior life.
Lily Hwang is the Sr. Director, Customer Deployments at Narrative Science. Connect with Lily on LinkedIn.