TECHNOLOGY
is something that’s especially important right now. With Covid-19 demonstrating the changing needs of customers, fintechs need to keep up and launch far more quickly.
AREN’T MOVING FAST ENOUGH, AND ITS FAILING THE END USER Change in financial services is constant, and emerging fintech players have now reached a level of maturity where they are challenging or revamping almost all pre-existing finance systems. Whether it’s know your customer (KYC), regulation compliance, or payments, fintechs are driving significant shifts in thinking throughout the industry. However, with every success story there’s a whole host of fintech failures, and often those fintechs that fail to progress beyond a concept, are those that spend too much time and money on their proposition. Many inevitably head down the ‘fintech spiral of death’ route - whereby the complexity of the market and a lack of access to funds, hinders their development cycle before it even begins. But this does not, and should not have to be the case. Why do so many fintechs fail? Many fintechs fail to launch due to the complexity of the sector. In amongst the world of regulation, licensing and compliance, fintechs often find themselves battling it
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out against other players in hope to launch to market quickly and stand out against the crowd. But whilst these requirements are all necessary, it can take fintechs up to a year, or sometimes longer, to jump through these hurdles and finally get to market.
“These processes have also become
much more expensive. For fintechs, especially those that do it themselves, time is money, and building and developing a platform can become an extremely expensive venture. This is why many bring in investors to further their operations and drive scale. But by increasing the time it takes to launch, fintechs are draining their initial funds before they have even started, and investors quickly move to new investment targets in the space.
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What’s more, the time spent navigating through the complexity of the ecosystem and wasting valuable time on back-end issues, means fintech are losing focus on what’s truly important - how to grow their customer base and drive revenue. This
The build or buy conundrum Not only is the slow, but necessary, world of regulation one of the biggest factors for a fintech failing, but so is building and connecting the different elements of the ecosystem into a platform. Since the start of the fintech revolution, many incumbents have attempted to match a fintech’s offering, developing their own innovative solutions by building it themselves - rather than seeking help from third party providers. Take the Royal Bank of Scotland (RBS) for example. It recently dropped its standalone digital bank Bo which tried to match the speed and simplicity of top challengers Monzo and Revolut, but couldn’t keep up with the pace and therefore failed. This is an example of why doing it yourself and building your own ecosystem is no longer working - even big players like RBS do not have the infrastructure to do so. Many good fintech ideas are therefore being lost in the abundance of new fintech taking the financial services by storm, but for fintechs to move quickly and stand out against the crowd, there’s another solution gaining ground. Let’s speed up innovation To speed up innovation and meet the demands of customers, fintechs need
