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FINTECH VENDOR GROWTH CHALLENGES
Too many great strategies are wasted on poor execution.
Fintech Growth Challenges
Too many great strategies are wasted on poor execution.
What Do Growth Struggles Look Like?
Fintechs With Challenges
Fintechs like KGA clients (both global incumbents and emerging) sell mission-critical solutions to banks, billers, lenders, merchants, and processors. Those applications include wholesale payments, fraud prevention, anti-money laundering, online banking and billpay, collections, biller billpay, card issuing, merchant processing, lending, credit reporting, and more.
Root Causes of Poor Growth-Strategy Execution
Most financial technology providers (incumbent & emerging) mistakenly believe that the buyer gets most of the value from the software (the left circle). In fact, the buyer gets more value from the rest of the vendor’s operating model – the “whole-product” – that touches the customer (the right circle).
Simply put, if you and your solution are easy to do business with during the life of the relationship, then:
- the value of the solution will increase
- there will be less price pressure, and
- you will sustain a competitive advantage
What Are the 2 Causes of Growth Execution Challenges?
Too little focus on the buyer
KGA clients usually know the general buyer care-abouts from market analyses (left side of this graphic). They also have buyer personas for the people in the buying group (right side graphic). But these fintechs consistently lack enough understanding of the buyer needs to design a compelling Whole-Product solution. The solution becomes bloated because the buyers “might” have needs. It becomes impossible to answer the hundreds of trade-off decisions involved in designing the Whole-Product because the answer is always “…it depends on who is buying the product and why…”. Trade-offs include:
- Should the solution package include Feature A or B?
- Do we need 24X7 or 8X5 customer support?
- Should the uptime SLAs be three or four 9s?
Too much focus on the software
Financial technology buyer needs go well beyond the software product. Clients care about business model details like contract terms, onboarding, product packaging, customer support, innovation programs, and the rest of the client touchpoints in the graphic at the left. These details must be designed-into the solution for a market-full of buyers so that the business is repeatable, scalable, and profitable.
Risky Approaches
Once the fintech’s growth strategy is formulated, many of our clients turn to Strategy Execution initiatives. Examples of those include turning loose the salesforce, establishing partnerships, writing new software, establishing service levels, and many, many more. Fintechs pursue misguided impulses like: “let’s to sell a few, and figure the solution out later.” Turning to Strategy Execution too soon introduces risk and has consequences.
Consequences of Poor Growth Execution
Risky Approaches
Once the growth strategy is formulated, many of our clients turn to Strategy Execution initiatives. Examples of those include turning loose the salesforce, establishing partnerships, writing new software, and many, many more. Fintechs pursue misguided impulses like: “Let’s go sell a few and figure out the rest later.” Turning to Strategy Execution too soon introduces risk from which some clients never recover.
Loss of Share
Since the strategy is a good one, competitors are also pursuing it. However, missed milestones give them insight into what isn’t working for the buyer and gives them lead time to gain share.
Unprofitable Growth
Closing deals without a detailed understanding of buyer needs and without a broad definition of the business model required to meet the buyer needs will result in:
- custom solutions that will not scale
- a poor understanding of the solution’s cost structure
Unprofitable Growth
Closing deals without a detailed understanding of buyer needs and without a broad definition of the operating model required to meet the buyer needs will result in
custom solutions that will not scale,
a poor understanding of the solution’s cost structure.
Loss of Share
Since the strategy is a good one, competitors are also pursuing it. However, missed milestones gives them insight into what isn’t working for the buyer and gives them lead time to gain share
Personnel Risks
The GM assigned to capture the net, new revenue envisioned by the strategy will be putting his/her career at risk. In addition, talented people will become dejected with the lack of success on something about which they were, at first, very excited. Some of them will leave.
