4 moves your company needs to make now • TechCrunch
This year marks The 10th anniversary of the fintech phenomenon.
Companies like E*TRADE, Rocket Mortgage and TurboTax began disrupting the established financial sector well before 2012, but that year marked the tipping point as fintech transformed into a sustained movement that would drastically change how most people manage their money.
If you’re a fintech startup, you’ll face four main types of competitors over the next decade:
- Traditional financial firms that offer more of a “super app” experience with strong membership benefits and perks;
- Advanced decentralized financial protocols that can offer financial products involving real values;
- Increasingly common embedded financial products sold by non-financial firms;
- A government-issued CBDC in many (but not all) countries.
Your company needs one very strong value propositions to compete with all four types of competitors.
This leaves most companies with two options over the next decade. One path is to specialize in a handful of products or services that you believe will have value on their own that consumers will sign up for despite robust competitor ecosystems. Alternatively, you need to develop a comprehensive strategy to compete and build a compelling line of products, services and benefits.
How can fintech startups prepare to compete in the next decade? Here are four steps you can take to stay competitive.
Any corporate strategy document will remain a fantasy on paper if your technical infrastructure is outdated and unable to meet your future needs.
Your technology stack must support fintech’s cutting edge
The fundamental step in any long-term strategy for the 2020s is to renew the firm’s technology stack to support future needs. You need modern technology infrastructure that can support greater automation across products, a sophisticated AI assistant, multiple integrations with external parties such as the crypto ecosystem, and non-financial benefits.
The process for improving your technology stack varies depending on the type of company. If you work for a large bank that still operates COBL, the first step is likely to be a massive investment in a multi-year process to migrate to a modern and streamlined technology infrastructure. If you are a relatively young fintech company, you generally have more “white space” to design your stack. The challenge for smaller companies is not dealing with decades of technology debt; rather, it is optimizing limited engineering resources to build the best possible technology stack.
Modernizing technological infrastructure is a difficult and expensive proposition. Generally speaking, the best way to get your company’s management on board with such investments is to highlight what your competitors are doing to help them understand the competitive threat.
