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As the industry leader For venture capital investment last year, the fintech market will continue to attract newcomers, boost growth-stage companies and force incumbents to adapt. Many fintech companies are marching toward similar goals: disrupting old financial practices.

Having invested in startups in my previous role and building a fintech company over the past decade, I’ve noticed a pattern of common mistakes and missteps that often occur with newcomers to the industry, but are also sometimes present in mature companies. To avoid the roadblock to business viability and growth, leaders should take note of these common pitfalls and mistakes during the early days and growth stage of a fintech company:

Mistake #1: Great user interface does not equal great service

Enduring fintech companies offer much more than a digital interface. Product design and UX are just one, albeit important, piece of the puzzle that makes up your company’s value proposition, but the overall customer experience depends on a much broader range of factors.

How fast can customers move and access money? How predictable and stable are your services? How do you balance risk and compliance with introducing friction into your customer journey? Do customers have access to live support when they need it? Are customer data and money safe and secure? Your company’s performance on these fronts has a much greater impact on customer satisfaction than the design of your application’s interface.

This is a common misconception because digital transformation has been emphasized in recent years, and as technology leaders, we tend to prioritize it. But in fintech, and especially digital banking, the stakes are too high to overlook the critical infrastructure at the heart of your offering.

Remember: banks are services, not apps. So, to compete with established banks and cutting-edge neobanks with these comprehensive risk, service, security, and compliance capabilities, fintechs need strong practices that need to be built in the early days of a business, sooner than many think. founders.

A banking experience that is reliable, secure and trustworthy trumps everything else and can make or break your business. After all, if scammers hack into your users’ accounts and steal money, how much do they really care how easy it is to switch between features?

Mistake #2: Settling for incremental improvement instead of disruption

Many fintechs are inadvertently building with a rearview mirror. Instead of building your product or experience to be better than Chase or Wells Fargo, consider the opportunity you have to change the way people interact with and benefit from financial services.

Think iPhone: It replaced the phone’s standard keyboard with a touch screen and added multimedia capabilities to completely redefine what a phone means. Compare that to the Nokias and Blackberrys of the world that were making incremental improvements to foldable phones at the time, and it’s easy to see how Apple succeeded in redefining this category.

Creating a solution that makes a task increasingly easier or integrating financial services into an existing application does not create a shocking change for users or the market. Fintech needs companies that redefine finance.

For example, Klarna and Affirm redesigned and redefined financing at the point of sale with buy now, pay later (BNPL). BNPL introduces consumers to a whole new way of thinking about financing purchases (closed-end installment loans instead of open-ended credit with traditional credit cards). BNPL also allows merchants to incentivize the purchase of specific products with interest-free financing (which the merchant can subsidize), something not previously available.

This innovation is also welcome in other areas of finance. For example, banks are extremely conservative when it comes to offering lines of credit for small businesses, as monitoring can become an operational burden on the bank and therefore less attractive for smaller, less lucrative lines. When we built BlueVine’s line of credit offering, we restructured it to be essentially a series of term loans under a replenishment limit, combining the control and operational simplicity of a closed product with the availability of an open product. This approach helped us make lines of credit more accessible to small businesses.

It’s easy to anchor your product to what others are doing or look for incremental innovation. Looking at the swaths of neobanks springing up, many look the same. Disruptive innovation will always be a challenge, and those players who dare to completely redefine the $800 billion banking market will be the ones to succeed in the same way Apple did with consumer technology. Those who simply beat the incumbents will pivot or fizzle out.

Mistake #3: Building superfluous features instead of adding value

To add value to your segment, consider your task and focus on doing it well. While the number of your features will continually grow, success is rarely measured by their number. Remember: quality beats quantity any day of the week.

Unfortunately, I’ve seen fintechs focus on speed of features or build things that just look “cool” instead of thinking critically about their customers’ needs and how to add value to their everyday lives. Some fintechs have a lot of third-party integrations for their users, but in reality, many of these third-party services are rarely used by their target segment. This type of storefront is a misallocation of resources that could be better spent improving and iterating on your core offering.

Another example: Many consumers don’t really want or need sophisticated financial visualization tools like cash flow forecasting. But we keep seeing these weird features in banking apps because, once again, they look great (or sound good to investors). But back-end functionality, like fast money movement, should be prioritized instead.

This is not to say that I am against adding features when appropriate. But in doing so, fintechs need to ask themselves two important questions when deciding what features, third-party integrations, or products to add to an offer:

  1. How does incremental addition to your platform create more value for your offering (as opposed to just being a supermarket)?
  2. Do your customers really care?

Features should be purposeful, thoughtful, and driven by customer needs or feedback. People will find a way to access the services they need, whether it’s within your platform or living elsewhere. There are needs in the market and so many jobs to be done, so question whether a certain functionality is the job of your company.

Mistake #4: Neglecting live support in favor of technology

Digital finance does not mean 100% self-service. Of course, the model must work and offer efficiencies by being digitally native, but there are many areas (banking being one of them) where live support is vital. Over-reliance on AI-powered chatbots, voice assistants, or self-service online resources is not only unwelcome by current users, it hurts your business growth.

This goes back to the idea of ​​understanding that your offering is more than just a product – it’s great to have a resource center for common questions or troubleshooting, for example, but relying solely on that plus email support is a huge shortcoming. . Strong customer support services require multiple avenues of contact (email, phone, SMS, in-app chat support), and most importantly, reliable ones. human support for. never needed, always there it should be what you’re optimizing for, and ultimately what customers appreciate.

Of course, developing just that initial support service is an investment that many young companies don’t consider in due time. Building, training, and running a 100-person support team is no small task, and sadly, many fintechs skip it to the detriment of their user experience.

With so much on the horizon for fintechs of all kinds this year, consider some of these potential opportunities to change how you prioritize some areas of your business this year.

The market is increasingly saturated, and the underlying technology, strong capabilities and products will be the factors that drive companies forward.

Eyal Lifshitz is CEO and co-founder of BlueVine.

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