Let’s face it, banking is boring. For consumers, it’s a necessary but dull utility like water, energy or air.
The biggest challenge for any startup is acquiring new customers. It’s even harder for fintech than other sectors because people don’t dream about better banking. Even worse, having defaulted first time round to whatever financial services come their way, consumers really can’t be bothered to switch. Inertia rules.
Angela Strange and Alex Rampell at Andreessen Horowitz suggest an answer. Identify triggers (or inflection points as they call them) in the lives of your ideal customers. A trigger event in a person’s life, is “a milestone (e.g., graduation), a point in time (e.g., immigrating to the U.S.) or even a micro-moment (e.g., making a first huge purchase)“.
The trick is to “identify and target customers with relevant offerings at these inflection points can acquire customers at a much lower customer acquisition cost (CAC).”
The best inflection points occur early in a person’s life. Why? Because of inertia. Lure them in early, and you have the advantage. Just as incumbents have today. Time to out-smart incumbents with this powerful strategy before they (& other Fintechs!) catch-on.
Snaring the Elusive, Mobile, Social 25 year-old
Who is your customer? Almost every fintech I speak with replies: millennials. You mean every adult on the planet up to age 35? Good luck with that. Attracting and holding the interest of mobile, socially connected individuals at scale is notoriously difficult – unless you’re BuzzFeed or Vice. But Great Big Story, a new subsidiary of CNN, are using the power of story-telling to great effect. They produce highly engaging stories in high quality video form and make them available, friction-free, over a well-designed mobile app, their website, Facebook and YouTube. In just 4 months, they connecting with large and growing numbers of mobile, social 25 year-olds. How are you reaching and engaging your (mobile, social, ‘millennial’) audience?
Overcoming the Most Common B2B Objection
Seth Godin shares the most common objection when marketing to businesses. The tendency is to drive prospects away by responding in precisely the wrong way. What should we be doing instead? Gold.
Keep Doing Mobile SEO
SEO veteran Bryson Meunier urges us to consider 5 reasons to keep at mobile SEO, despite the rise in paid mobile search: 1) The first organic listing in mobile still gets 73% more clicks than the first and second sponsored listings combined, 2) People mostly click on the top 4 organic listings in mobile, even more so than on desktop, 3) Organic search is more effective than paid in bringing non-brand traffic from mobile, 4) Mobile SEO is about more than 10 blue links on a search result page, 5) Mobile SEO works. An effective mobile traffic strategy balances both paid search and SEO. Take heed.
Less is More
The bigger the funding round, the bigger the valuation, the bigger the exit. Right? Not so fast says Jayson Tischler at Rittenhouse Ventures. Jayson makes a compelling argument for startups to be optimising rather than maximising levels of funding (as well as the investor, timing and other terms). He shows how an 88% increase in exit value is needed for a 66% increase in the entrepreneurs’ financial outcomes. The odds are stacked against higher exits so beware. A must-read if you’re considering a funding round anytime soon.
The smaller and earlier stage your startup, the smaller your board should be, says Fred Destin. “Complexity kills, speed matters, trust and intimacy leads to better and faster decisions. Any deviation from these core principles needs to be thought through carefully. At seed, small truly is beautiful.” Well said.
The Startup Zeitgeist
The Macro is Y Combinator‘s storytelling newsletter. They recently shared the results of an analysis by Priceonomics of insights and trends behind 8 years worth of startup applications to this revered seed accelerator. Some fascinating insights include the shifting sands of who startups see as their main competition, business models and platforms.
UK Challenger Banks Hit Glass Ceiling
According to Warren Mead (global co-lead of KPMG’s fintech practice), the UK’s challenger banks are massively outstripping the Big-5 incumbent banks in terms of lending asset growth, pre-tax profits, return on equity and cost to income ratio. The problem is that competition from fintechs and amongst challenger banks themselves is intensifying. This means that further growth is limited by how well the challengers can differentiate themselves to overcome the inertia of the masses. Also, as their profits exceed £25 million they’re being slapped with the government’s 8% banking profits surcharge. Ouch! Warren foresee’s consolidation ahead. The alternative IMO is a smarter growth strategy…
Digital ‘data flows’ have added $2.8 trillion to the global GDP over the last 10 years according to new research by McKinsey. They urge business leaders to consider 5 questions: 1) Do we have a clear view of the competitive landscape?, 2) Do we have the right assets and capabilities to compete?, 3) Can we simplify our product strategy?, 4) Should we retool our organisation and supply chain?, 5) What are the new risks? Can you answer these questions for your fintech startup?
Joi Ito explains why we should be focussed on “eliminating one of the root causes of our impossibly complex and outdated (economic) system that we’ve built on a 700 year old double-entry bookkeeping method – the very same system used by the Florentine merchants of the 13th century.” In short, book-keeping and accounting are ripe for disruption via Blockchain et al.
Please consider forwarding the Beyond Fintech newsletter to a friend or colleague … thank you!