Why building trust needs to be a greater focus for fintechs

Matic Jug, Head of Growth at ICONOMI, explores the end of the “glory days” of fintechs and how the future lies in building trust.

Fintech has evolved dramatically throughout the last decade. Moving from a handful of precocious challengers to a globally respected industry that is not only challenging traditional finance, but shaping it. But the period of rapid growth is ending, and as fintech begins to consolidate, consumers are paying more attention, querying why only around 40% of fintechs make it to maturity – and if that’s the case, why they should trust them with their money. Stricter regulation is helping, but with continuing financial instability impacting most of the world, customers are more cautious, and the only way for fintechs to be sure of their ongoing commercial success is by making trust their key differentiator.

Shifting the focus from expansion

It’s perhaps to be expected, with the nature of the sector, but until very recently, growth was the only measure of fintech success. The number of users, territories, and investments were the only metrics that really mattered. Consequently, too many fintechs scaled too quickly, and with no strategies for resilience, they came undone. Destroying customer trust in the process. That strategy was entirely unsustainable. The only way forward now is to rebuild confidence

The enduring power of data

Data has become integral to all technology businesses, but in fintech it does so much more than aid decision-making; it can become the foundation of consumer trust. By using data throughout the customer journey, fintechs can not only better support the customer but increase retention for the business, through the reduction of friction points and the improvement of onboarding flow. When customers feel overwhelmed by overly technical processes or language, or a website feels clunky and unwelcoming, both their satisfaction and their trust begin to fall. The correct use of data can prevent that from happening.

User experience for enhanced credibility

When the first fintech platform launched, consumers had few expectations. Everything was new, and everything looked and felt better than the staid processes of traditional banking.  But people now know and expect more. A platform with a cluttered interface, opaque pricing or complicated onboarding process can make customers doubt. A seamless and intuitive experience, on the other hand, inspired confidence. When you make risks clear and fees transparent, there’s no sense that you may have something to hide. And when navigation is easy, consumers feel that they are in control. Openness and simplicity build customer confidence alongside business credibility, which gives any platform the legs it needs to thrive.

The problem of overstretching

Credibility is also enhanced by customer knowledge. Almost counterintuitively, the most successful fintechs have been those with a narrower focus. The lesson being that you can’t serve everyone, and you can’t gain every customer’s trust. When you focus on a defined niche, you can design products and services that genuinely solve particular problems. And when you do that, you don’t have a broad reach, but you do have higher satisfaction and loyalty. When customers feel that a platform understands their unique circumstances, they are more likely to advocate for it. There’s always room for expansion later, once you have infrastructure in place to ensure that your core audience remains fully supported.

Transparency will always have value

One of the reasons why fintech found a waiting audience in the early 2010s was the public drive for something different following the 2008 financial crisis. Public trust was at an all-time low, and fintech promised an alternative. Reneging on that promise with a failure to deliver transparency will instantly erode trust. Today’s consumers want to understand risks, fees, and safeguards. They expect strong security and open accountability. There are different ways to deliver this, but welcoming third-party audits, communicating openly, and acknowledging mistakes honestly are all simple ways to reinforce credibility at every stage of the customer journey.

Championing education

If consumers don’t understand the fintech space, how can they be expected to embrace it? While self-education is clearly an option, it’s often impossible to find the advice you need if you don’t know exactly what you’re looking for. And this applies to all areas of finance, which is why only around 23% of UK adults (about 12.5 million people) actively invest their assets. The lack of understanding creates a significant barrier to adoption, which is why it makes sense for fintechs to be more proactive.

By offering tutorials, explainers, webinars and accessible insights, fintechs can demystify their products. Education helps users to make informed decisions, reducing anxiety and increasing engagement. And when you take steps to educate your customers, you build loyalty and trust.

The fintech industry hasn’t stopped evolving. Consolidation doesn’t mean stagnation. But there’s no getting away from the fact that those early glory days are over. Success now won’t come down to new ideas and innovation. It will be built around meaningful service and trust. And the sooner fintechs begin to appreciate that, the sooner the sector will regain its equilibrium.

Matic Jug is a growth-driven marketing strategist with a deep passion for crypto and digital innovation. As Head of Growth at ICONOMI, he plays a key role in expanding one of the leading crypto portfolio management platforms, helping bridge the gap between traditional and digital finance.