Investment in the sector has reached an all-time high, with
UK fintechs attracting a staggering $24.5 billion in the first half of 2021.
And with there now being an estimated 2,500 fintech’s in the country, it’s
clear, if it wasn’t so already, that the term is far more than just a buzzword.
But, getting to the stage of multi-million-pound investment
doesn’t come easy. And constant regulatory changes, the complexities of
markets, and ever-growing competition means that building and launching a
fintech is no easy feat.
But new fintechs shouldn’t have to struggle getting off the
starting block, nor should they allow themselves to be limited by these
factors.
There are a number of things fintech entrepreneurs need to
account for when launching their business, but getting back-end processes right
in order to create an excellent customer experience is by far the most
important. The ultimate question is, how can you do this from day one?
Partner with a like-minded player
Businesses across all industries have transformed their
products and services to meet the demands of a society fed on a constant supply
of instant access.
Take payments – a huge part of the instant economy. Recent
research revealed that some 82% of consumers now expect digital payments to be
instant and convenient.
And, contrary to popular belief, appetite for instant
payments isn’t restricted to the younger demographics. Over two thirds (65%) of
over 65s are open to using new financial services or payment methods that make
things quicker and more convenient for them. So it’s clear that organisations
must prioritise meeting these expectations from the start.
In building a fintech, all entrepreneurs need to recognise
that they operate within the instant economy, and they need to partner with
those that recognise this too. Collaboration with like-minded firms will go a
long way to ensuring a harmonious working relationship, while keeping instant
economy thinking front and centre at all times.
But fintechs can also go a step further. To really move fast
and scale nowadays, they need to be prepared to make strategic changes to their
infrastructure when and where necessary. And they can do this by utilising all
the tools available to them.
Harness the butterfly effect of payments
There is a direct link between payment technology and customer
experience. And this doesn’t just apply to consumers, but also to corporate
customers. After all, we all expect streamlined, instant access to services,
both in our personal and professional lives, and this is particularly the case
when it comes to sending and receiving payments.
Research conducted in late 2020 found 62% of payment
professionals believe the hidden costs of current payment processes actually
overshadow the hard costs (i.e. known costs like salaries and overheads). And
the impact on customer experience and brand reputation was considered to be the
most harmful and costly.
Clearly, fintech entrepreneurs need to avoid these potential
hidden inefficiencies. And they need to make this a priority if they are to
succeed in the instant economy.
To build a fintech correctly, it’s important to choose the
right back-end systems from the get-go, as these can have a considerable impact
on front-end outcomes, including customer experience – it’s what we call the
butterfly effect of payments.
A good example of this is choosing single, immediate Faster
Payments for loan disbursements over batch-based payment processing. Your
customer service teams will thank you because your customers won’t be chasing
them to find out where their money is thanks to near real-time payments and
instant notifications.
Entrepreneurs should also build their fintech on a powerful
API platform. API-enabled payment processes are easily integrated and provide
companies with faster and more reliable ways to move money. Through API,
businesses can automate payment flows, embed payments and build entirely new
payment products and services managed in real time.
Don’t let customer experience flutter by
Building a fintech is hard. But to bolster and future-proof
operations, putting customers first is key. While partnering with like-minded
firms is a necessary step, it’s only half of the battle. Business leaders must
identify the possible pitfalls, and in many cases, this starts with payments.
By identifying and avoiding potential back-end payment
inefficiencies from the get-go, entrepreneurs can build on the firmest
foundations while prioritising customer experience and putting themselves in
the best position to thrive in the future.
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