April 11, 2018

How can Fintech companies win customers? Here's what the data says

Charles is a former PPA Business Journalist of the Year, specialising in AI and Fintech. He began his career as editor of Euro Business Magazine and now writes on the rise of AI and algorithms in business.

Smart Platform blog
How can Fintech companies win customers? I spend a lot of time talking to brilliant companies in the space, and I'd rank this as their #1 concern.

Even when they have a killer product, they can find it hard to get traction.

Why?

Part of the problem is the crowded marketplace. This is a boom time for Fintech.

Jump on the tube and you'll see what I mean. This morning I noted five Fintech ads in a single carriage on the Victoria line: account aggregator Yolt, share trading site eToro, asset manager Nutmeg, and price comparison site Uswitch.

Habito, the mortgage site, is a habitual tube advertiser.

Abba Newbury, the head of marketing for Habito, tells me, “Our star performer has been London Underground advertising, bringing an affluent, knowledgeable and tech savvy customer to our site. However, this channel has its drawbacks, being unique in terms of dwell time to the advertising, and not replicable nationally.”

Competing for mind space is expensive, too. Want to join those tube advertisers? Getting your ad in every carriage for two weeks costs £127,000. Not cheap!

But the biggest obstacle is consumer conservatism. Consumers worry deeply about their finances. They are reluctant to experiment.

Fortunately, this is a problem we can address with deep data-sets. These magic numbers show a serious gap in trust between the public and Fintech brands. Fortunately, they also point the way to bridging that gap, and winning the trust, and patronage, of those doubters.

Let's start with dynamics of trust in Fintech.

A poll by Ipsos Mori shows 63 per cent of consumers recognise the uniquely personalised services Open Banking can provide, when shown examples. That's a strong number. But just 13 per cent are happy to share their data with third-party providers.

Why? A whopping 66 per cent say they are worried about how their data would be used. After the spate of data leaks, from Yahoo to Facebook, this is understandable.

So we have a high baseline of trust. Exacerbating this, genuine efforts to improve data privacy are going largely un-noticed. The GDPR ought to be boosting confidence. A poll by YouGov in March revealed 72 per cent of Brits had never heard of GDPR. A recent edition of Question Time focussed on data security – not once did the five-person panel nor the audience mention the GDPR or appear aware of it.

Okay. So now for some optimism. The survey data show us how trust is won.

It comes in three steps.

1) Familiarity. Trust is fluid. Consumers can learn to love new tech fast, but only when they get to play with it. For example, an HSBC survey shows fingerprint security is trusted by 46 per cent of consumers, compared to 26 per cent who trust iris recognition. From a technical perspective, this is odd. Irises are, if anything, more secure than fingerprints. Yet people trust fingerprint biometrics more because they've seen it more, and used it. Familiarity is the key.

This highlights the need for tactics which improve familiarity. For example, Freemium pricing can introduce a product to a new set of users.

2) Highlight banking credentials, not social media

A critical lesson from the survey data is the gulf of trust between banks and social media companies. Banks are trusted. Social media brands are not. Look at the chart below. YouGov finds 59 per cent of us will trust a financial services company, compared to 11 per cent who'll trust of social media brands and 10 per cent for retailers.

Successful Fintech brands are positioning themselves accordingly. Account aggregator Yolt is overcoming doubts about security by stressing its ownership by ING Bank, a mature bank with 48 million customers. Insurance app Wrisk flags up links with Hiscox and Munich Re.

3) Make it easy

YouGov produced

Fintech brands live in a competitive world, where budgets are tight. Survey data offers clarity as to how to win more customers: as the statistician W Edwards Deming said, “Without data, you are just another person with an opinion."

In a nutshell, build a friendly product, position as financial not a social brand...and be patient.

Consumers may be cautious, but their trust is winnable.

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