Article written by: James Boyd-Wallis, Practice Director at Brands2Life
Once confined to mobile payments and marketplace lending, fintech has rapidly expanded to encompass robo advisors and even RegulatoryTech among much else. As the industry continues to grow and permeate into further areas of our business and personal lives, an increasing number of people – be they consumers, politicians, regulators or the media – are taking a keen interest in the sector. But while this interest is to be welcomed, it means growing fintech businesses must begin to behave more like their FTSE-listed financial services counterparts than their more disruptive technology cousins.
Just last month, a report from KPMG, the professional services firm, and CB Insights, the venture capital insights firm, showed that despite a slow end to 2015, investment in VC-backed fintech companies has rebounded in 2016, boosted by $100m plus mega rounds across the globe. Here in the UK, Eileen Burbidge recently hailed fintech as the area most likely to produce a tech giant equivalent to Facebook or Google in the UK.
While this is ostensibly positive news, fintech is a very demanding space in which to compete. Since the likes of Zopa which began a decade ago, there are many new entrants to the market, making differentiation even more critical. What’s more, many businesses in the space expect quick growth – moving from start-up to scale-up in double quick time. The resultant culture is often a mix of ambitious tech giant combined with the shrewdness of savvy investment banker. This creates an air of expectation, against the broader context that these businesses often count household names in established markets with decades – or even centuries of history – as their primary competition.
However, fintech companies often work in untested, unregulated markets, offering new ideas and services to customers who previously used a bricks and mortar bank, for example. Many are reliant on the sharing economy, for which you need the faith of a community behind you. While their entire industry is built to disrupt an industry in need of disruption, individual companies must ensure they are seen as responsible members of the FS community – especially given the importance of trust and security when dealing with someone’s finances or a business’s capital.
But how should fintech companies go about building such trust and create a reputation which is perceived well, judged to be secure and seen as an asset? The importance of reputation comes down to how we use communications to shape and sustain a valuable brand that will help a start-up grow and develop. Investor interest, consumer trust, industry credibility and employee engagement are all part of effective reputation building and strategic communications. You cannot influence all these groups overnight so a gradual, sustained approach is the only way to transform the grit of a start-up into a pearl of a scale-up.
So how do fintech businesses create a strong reputation?
1. Take a 360 approach to messaging
There was a time when communicating distinct messages to different groups was accepted, but those days are long gone. Thanks to the accessibility of information and the blurring of boundaries between how we receive our information, consumers, employees, suppliers and investors can all absorb the same messages about your business, whether you like it or not. Take, for example, the issues surrounding LendingClub. The company’s CEO, Mr. Laplanche, who also started the company, agreed to leave after the board found employees had falsified data on loans sold to an investment bank. Since that discovery, the company has had one of the worst months on record. Total transparency about who you are and what you do is fast becoming the accepted norm for building a trusted following and impropriety creates a serious impact on confidence.
What’s more, messaging needs to be stable and lasting. Bashing the established players may produce short-term results, but what happens if and when a partnership is announced or the more traditional FS industry is needed for much growth-funding? Early, attention-grabbing campaigns must always be approached with a long-term lens.
2. Base your communications on solid industry insights
The number one communications myth among fintech startups is that you can just pick up the phone to a few journalists, tell them why you’re different, and there you have it, some PR coverage. Journalists want hard news so app launches, product updates and appointment announcements will not often cut it.
Instead of force-feeding sales pitches to naturally skeptical media, fintech companies should come back to the problem they’re trying to solve. Talk to your customers, aggregate their insights, analyse your internal data or commission market research. Find great case studies of individuals and companies whose lives and businesses have been improved by what you do. All of these insights provide a great basis for newsworthy content.
3. Craft better stories
It is not just what you have to say but how you say it that will help you gain status. This is the creative element of communications and involves an understanding of the different mediums available today. Having gained the coveted unicorn or $1bn valuation, TransferWise is a great example of a fintech business that understands the power of good storytelling – gradually adding layer upon layer to the initial grit. Like Transferwise, a good story will go beyond the immediate purpose of the company and talk about the bigger issues, be they social, economic, or political. Doing so will ensure your business resonates not only with you direct audiences but also the wider public.
4. Profile expertise
By their very nature, fintech companies merge finance and technology. Stakeholders need to know you have the right CTO and tech team, as well as the financial leadership required. As such, you need to showcase the expertise of the entire team. Whatever the method used to do this, the experts should be explaining the bigger picture to become respected commentators, not just their company’s value. Investors, the media and the wider public need to know your firm has both the financial nous combined with the technical knowledge to ensure a seamless service – building trust and reputation.
5. “Borrow” a reputation
Strategic partnerships are a good way to combat stakeholder uncertainty for unknown fintech companies. “Borrowing” the reputation of established third parties will help establish the new business as already embedded in the sector, winning trust among all stakeholders. This can be done through publicising the VCs invested in the business, sharing the names of recognised customers (with permission, of course) and working with industry bodies such as Nesta or Tech City UK around strategic projects. The reputation of the business depends on these commitments so it can never be too early to start seeking the right partners.
Fintech businesses have a great opportunity to shape an industry that’s just beginning to change the way we live and do business. But in order to do this, they need to start building their reputation from day one, telling better stories, seeking strategic partnerships and elevating their reputation. But doing this takes time. Adding layer upon layer, bit by bit, gradually turning that grit of an idea into a pearl of a business.