Ivan Zhiznevsky, CEO of 3S Money
Fintech growth has risen massively, with studies showing that the Fintech market is projected to reach $310 billion by 2022. Yet the bigger the rewards, the bigger the risk.
While avoiding risks entirely is impossible, the way to win in the Fintech industry is to embrace change and avoid the mistakes of legacy institutions. Embracing the lessons from those who have come before is crucial to the future success of our industry.
Traditionally, banks had a monopoly and there was very little competition in the market until a wave of Fintechs emerged. Fintechs have an inherent advantage because technology is at their core and allows for agility. Their technology exists to solve the issues of legacy systems, in many cases replacing the traditional retail and merchant experience.
Fintech players are not tied down to legacy systems or processes like established players. While this is a huge advantage, they’re at risk of wasting it if they don’t successfully collaborate.
Embracing changes in the industry
Fintechs should embrace the change necessary to navigate the banking sector to bring the most successful services to market, rather than running full speed ahead and focusing only on innovation.
This can be done through hiring and retaining top talent. Good Fintech leaders must realise that investing in talent retention will organically lead to more successful services being launched to the market. Our growing team recently launched a trade finance offering that is the first of its kind for small and medium-sized businesses. We couldn’t have done this without having invested in senior hires and betting on the right people. This isn’t to say innovation should be discarded – quite the opposite! But paying close attention to the external changes in the sector is key to ensuring Fintechs does not waste its advantage.
Failing to acknowledge the risks of resisting change can manifest themselves in the recent news reports of the Fintech bubble bursting and a rise in hiring freezes and redundancies. To avoid these adverse effects Fintechs must adopt the mindset that the race to win is more of a team sport than an individual one.
Avoiding legacy institutions’ mistakes
Legacy institutions have often been stand-offish, and reluctant to play ball with new market entrants. Fintechs must avoid this mistake, as collaboration will lead everyone down the path to success. Fintechs rely on established banking infrastructure to be able to run and operate legally, so they must foster a spirit of collaboration with established players.
It’s well acknowledged that Fintechs are advantageous to banks as they allow them to stay relevant and quickly launch new services to consumers. Fintech is at the forefront of solving issues that the legacy institutions haven’t been able to but, Fintech founders, need to be careful not to waste this opportunity by being too competitive. It is collaboration that will see success – for our customers, for our employees, and as an industry.
Fintechs must also collaborate and support other Fintechs. In a market that’s growing quickly, the mindset that must be adopted is that other Fintechs are more friends than foes. Viewing this collaboration as a team sport allows for leverage on what possibilities are out there and creates a win-win environment. For example, our recent sponsorship of a Femtech start-up accelerator provides female entrepreneurs access to a grant that will help with getting their business off the ground. Supporting and enabling other companies to grow not only promotes and fosters innovation but also allows for companies to be seen as a dominant force in the banking and tech sector.
Fintechs have solidified their position in the industry. With technology at their core, they solve the issues of legacy systems, in many cases replacing the traditional retail and merchant experience. Yet, they are at risk of wasting their advantage. To avoid doing so, Fintechs must embrace the changes in the industry and adopt the mindset that the race to win is more of a team sport that requires collaboration rather than competition.
