As the digital revolution becomes more and more ubiquitous, the question of what’s going to make FinTechs stand out from the pack becomes increasingly more pressing. The answer, that said, is as old as business – reputation and trust are the drivers that will make or break any financial company no matter how cutting-edge their technology products.
How best to build that trust, that said, isn’t always an easy question to answer – particularly in the fraught and heavily regulated financial industry. What’s the best technique to set yourself up for success?
That was the question addressed by a full panel of industry experts at a July 29 webinar hosted by Lendit Fintech.
“I think that our health and our money are the two things on which most of us are unwilling to compromise,” said Kristen Durham, VP of startups with Zendesk. “So, in that regard, both traditional financial services companies and FinTech companies have a pretty high burden of trust to be met.”
While that expectation may be similar, the challenges facing FinTechs and startups are not necessarily the same as those facing incumbent institutions. In most cases, FinTechs are much younger – which can be advantageous, as they lack the long train of baggage that legacy tends to bring with it. But it also renders them relatively unknown quantities, and that reputation can be at its most fragile in the early days while companies are looking to establish themselves.
That reputational fragility – and the careful steps that need to be taken to preserve and grow it – are universal, whether dealing with end customers, other businesses, or regulatory agencies.
“Transparency is important – I think you should be as transparent as you can,” said Dan Quan, co-founder and general partner at Nevcaut Ventures – and formerly the senior advisor to the director of the CFPB. “The key thing, really, is to talk to them honestly. If you tell them this is what you’re doing, this is your plan, this is how your customers are expected to use your product – that’s all key. It takes a long time to build a reputation with a regulator, and it takes only one lie to destroy everything. Once you’ve lost it, it’s really hard to get it back.”
Honesty and transparency make a good, obvious foundational stone for any business operating at any level, but the expectations outside interests have go well beyond that. Sometimes, those forces can seem to be somewhat at odds – investors are extremely revenue-focused, but customers have very different needs that aren’t always friendly to a company trying to draw more money out of their wallets.
What it comes down to, more than anything, is responsiveness to all those concerns.
“The devil is in the details of the metrics you put against this,” Durham said. “Very practically speaking, companies can make it a good ways before they really have to start building robust processes or putting big systems in place, but the opportunity to get started early is there.
“Those doing customer experience well see those early investments help them not only meet minimum expectations, but also really set up the business for growth. Every time a customer reaches out, it is an opportunity to build that relationship, not just to solve an issue, but to upsell or cross-sell. Implementing technology that lets you build that customer record as early as possible in a unified place, where you can analyze and improve process from there, certainly