If you'd like some answers, come in and see us for a free fintech brand audit. We're naturally curious.
How do fintech companies develop their brands in order to stand out from the crowd? In such an innovative, creative and fast moving sector the competition is fierce and customers have high expectations.
What can fintech brands do in order to steal a march on the traditional incumbents and their other competitors? We’ve taken a look at brand experience, recognition and differentiation. We’ve analysed the key brand fundamentals and tracked the trends.
Why so many fintech businesses?
The government’s FinTech State of the Nation report estimates that the number of fintech firms, currently standing at 1600+, will double by 2030. There are a number of reasons for the rapid proliferation of new fintech organisations and the success of this new financial services sector.
A few years ago the financial services industry – and all the organisations it dealt with – was ready for disruption. Traditional brands were perceived as entrenched and complacent. And institutions weren’t delivering what their increasingly sophisticated and tech-savvy customers wanted. New technology was available to support the innovation and success of new services. Plus consumers were willing to trust successful fintech ventures, to become early adopters and commit to using their platforms.
It was the perfect storm. Time for disruption. Time to change the way that consumers interacted with financial services.
What does fintech encompass?
You’ve heard the term fintech being bandied about but are you curious to find out what it actually means? Simply put, it’s the unbundling of services from financial services companies coupled with better customer experiences and supported by new back-end technology. These companies focus on doing one thing really really well.
It’s all about simplification – the removal of friction, inefficiencies and stress. The early fintech challengers delivered the necessary clarity. That was enough to sway people and other entrepreneurs soon followed suit.
Fintech has now infiltrated many sectors in the tangled web of traditional financial services including mobile payments, loans, fund-raising, money transfers and asset management. One of the most commonly cited examples of customer-facing financial institutions impacted in the UK is banks.
At the recent British Banking Awards, Starling Bank swooped in to collect three awards including ‘Best British Bank’ for the second year running, ‘Best Business Banking Provider’ and ‘Best Current Account Provider’. Starling Bank is only a few years old and demonstrates how a relative newcomer can effectively disrupt the existing market with its mobile-only services.
Founding and funding
The UK is fully supportive of fintech as a growth industry. With a positive regulatory environment the government is committed to supporting innovation in this sector. Funding, support, accelerators and incubators are all available to fintech entrepreneurs.
According to the State of the Nation report 42% of digitally active adults in the UK now use the services of at least one fintech business and more than 20 million people use banking apps. The UK has the skills, talent and expertise to enable brands to take advantage of emerging technologies, to innovate and to feed this growing market.
For investors, there’s a fabulous opportunity to find exciting and creative companies which also have commercial potential. An irresistible combination.
How has fintech changed customers’ behaviour?
Customers have now bought into the idea that they can benefit from new technology and improved experiences. In turn, technology has been influenced by buyer behaviour.
People are behaving differently. Their expectations have changed and simplicity is no longer a key selling point, it’s a fundamental requirement.
Consumers expect a seamless experience, with streamlined processes and services which meet their needs. Incumbent financial institutions have already started to leverage fintech capabilities as a growth platform and even more of them will do so in the coming years as the market matures. According to the State of the Nation report, 56% of traditional financial institutions have put disruption at the heart of their strategy.
The battle for recognition
So how are fintech brands faring in this intensely competitive market?
The financial services ecosystem is large, complex and undergoing rapid evolution. There are lumbering brands on one side and disruptive agile start-ups on the other. New companies face a huge challenge in defining their position. Customers are discerning and tech-literate so fintech brands need to stand for something more in order to compete.
The democratization of the fintech sector has been exemplary by any standards. There are many success stories including Revolut, Atom and N26 for example. But differentiation is key within a market where everyone is innovating, everyone is digital and everyone is out to delight the customer with their technology.
How can individual fintech companies make their presence felt?
Fintech brand experience
We have almost reached a status quo – the ‘new norm’ – whereby all banks deliver simplicity from a user’s point of view. So how can customers differentiate between them? This is where brand comes to the fore.
Branding is cited as one of the three biggest challenges facing fintech start-ups (in case you wondered, the other two are financial regulation and scalability as defined by Refinitiv). This is a common challenge which exists across fintech organisations. Big budget marketing and branding still belong to the behemoths.
For the wider fintech market it comes down to brand experience.
Fintech brand recognition
Challenger banks are constantly curious. Seeking ways and means to establish brand recognition with their existing and potential customers.
The YouGov BrandIndex recently revealed that the UK’s most recognised brand is the challenger bank, Monzo. BrandIndex asked customers of 1,500 businesses if they’d recommend a company to friends, family and colleagues. Monzo came out on top.
Unusually for a bank, Monzo has an active community of users. The brand’s personality has evolved during the last couple of years by encouraging in-person ‘town-halls’ and an online community of users who are advocates of the company. More than 40,000 of the bank’s 1.6 million users regularly participate in the community forum.
Brand advocacy is key to fintech organisations keen to promote themselves to a wider market. Amelia Brophy, Head of Data Products for YouGov confirmed “… fintech companies have led the way [in brand advocacy] and they’ve done so by promising simplicity and clarity in an industry where consumers have often been confused and frustrated by traditional institutions.”
What’s in a name?
Fintech companies are known for their short snappy names. Think Tide, Exo and Chip. Often they’re literal and describe, to a large extent, what the company does, for example TransferWise (providing better currency exchange rates), Receipt Bank (a tool for accountants and bookkeepers) and Paid (payments for freelancers). Frequently their names contain the word ‘Bank’. Sometimes there’s more to the story:
• Starling Bank describes how “the Starling bird is sociable, adaptable, friendly and supportive – all qualities we wanted from our new bank. It also works as part of a team to make something as complex as a murmuration feel beautifully simple. Plus, it’s a rather successful bird, which arrives in huge numbers in each new territory and displaces the old guard. Enough said.”
• Monzo inititally traded as Mondo. They needed to change their name for trademark reasons and called on their customers to suggest names beginning with ‘M’. Thus, with the change of a single letter, they came up with the new brand name Monzo.
• Klarna is a Swedish bank providing payment solutions for online storefronts, direct payments, post purchase payments and more. The Swedish translation of ‘Klarna’ is ‘clear’. They explain “we want to be simple and transparent in everything we do – because life is complicated enough already.”
What is the point of differentiation?
Branding isn’t just about a company’s website and logo. It’s all about their core values and the emotions it evokes in customers based on perception, recommendations and experience.
“… your branding is your simplicity. Your branding is your usefulness. Every time a customer can find something quickly and easily, that’s branding … Great customer service is branding. Branding can be about what is good and what is useful. Branding can be about the truth” explains customer experience guru Gerry McGovern.
However, the biggest challenge is identifying how fintech companies can stand out from the crowd and build awareness. With their stripped-back digital functionality, fintechs are often the envy of many of the established financial institutions.
One rather damning example of this was reported last year when one of the incumbent players, in a rush to develop an app with the ‘look of the moment’, copied the exact look and feel of the Monzo app in a mock-up of its new design. Well, Oscar Wilde did say imitation is the sincerest form of flattery.
There are many successful fintech companies who have embraced the available technologies to provide effective, experience-led, products for their customers. We guess you’d like to see the summary of principles that we’ve gleaned from up-and-coming businesses as their brands evolve?
Four fintech trends for 2020
• Established financial institutions will continue to evolve, innovate and adopt fintech technologies. The State of the Nation report estimates that 82% of UK incumbents expect to increase fintech partnerships in the next three to five years
• Venture capitalists will increase their investment in this rapidly-expanding sector. Although the number of deals has decreased in the last 12 months, overall investment size has increased. A sure sign of the market’s growing maturity
• Millennials will establish themselves as core customers in the fintech market. They number almost seventeen million people, making up over a quarter of the total UK population (also identified as a significant trend in the US according to Forbes)
• The focus on user experience will lead the expansion in this sector with the development of new products to address customers’ pain points. New technologies will allow customers to carry out increasingly complex transactions digitally
If you’re curious to find out more about fintech branding and making your presence felt in this exciting sector then contact us…
If you'd like some answers, come in and see us for a free fintech brand audit. We're naturally curious.