What fintechs can learn from Turkish founders

This year we have seen the global financial environment turned upside down.

Fintech feels the chill as VCs tighten their purse strings; they raised 59 billion dollars in the first half of 2022, according to Innovate Finance. A lot, yes – but not that much compared to the staggering 98 billion dollars given in the same period in 2021.

For better or worse, entrepreneurs and investors are shifting markedly from a “growth at any cost” mindset to one that prioritizes business resilience, longevity and profitability. It’s a big change in perspective for entrepreneurs who have known nothing but easy money.

As Turkey’s largest neobank, we like to think that we are more than well versed in traversing difficult market conditions, changing political landscapes and worsening macroeconomic conditions. It is something we have scaled with and always navigated. While economic growth has slowed in Turkey, we have continued to grow and scale at a rapid pace – and all without external funding up to this point.

So, what does it take to overcome complex market conditions? And what can global businesses learn from those who have operated in volatile financial ecosystems for years?

Here are a few takeaways from our experience.

Build a sticky user base

Growing a customer base that is not only loyal to your brand but promotes your business is key. But this is no easy feat and requires a relentless focus on meeting users’ most critical needs in the most cost-effective way. Western disruptors have struggled to do this so far, because while switching between more traditional banking providers and newer digital payment apps has become a mostly frictionless process, there is still a “trust gap” to overcome with customers. That’s why it’s so important to listen to your users – and let them know you’re listening to them.

We listen to our users through various channels such as market research focus groups, social media and customer support. Importantly, we take immediate action on their views and suggestions, and having dedicated in-house technology and product teams allows us to move as quickly as possible.

We’ve also seen firsthand how important it is to innovate when it comes to our customer support mechanisms to build a sticky user base. We not only track how many calls are answered in how many seconds, but we also track “how” the agent solves the problem to ensure the best possible customer experience. Social media interaction plays an important role in all of this as well, to let customers know that you are responsive and aware of their concerns.

Invest in your product

The above is all well and good, but customers are unlikely to stick around unless the product you offer is the one leading the market. In an increasingly crowded market, it is important that your product stands out from the competition. That’s why I always advise new fintech startup founders to invest in product rather than marketing – marketing can and should come later. Word of mouth is worth hundreds of thousands in marketing costs.

Although not a fintech company, last year Airbnb co-founder and CEO Brian Chesky echoed this sentiment when he claimed the brand would “never go back to spending the same amount of money on marketing as we once did”. He rightly emphasized that the pandemic showed that the brand was able to completely cut marketing costs, but still drive 95% of the same amount of traffic as the previous year when borders and hospitality reopened. If you have a strong and resonant brand – and prioritize your product to achieve this – people will follow.

Build your technology in-house if possible

If you are not producing your own technology in-house, you are effectively an operating startup tied to a third party as well as their processes and technology. While it may increase time to market in the short term, outsourcing your technology teams is fundamentally unsustainable. We have always developed our technology in-house, which has enabled us to be more agile and responsive to our customers’ changing needs and has undoubtedly helped us get to where we are today.

If the pandemic has taught us anything, it is that the world is limitless when it comes to employment. There is an untapped pool of international talent in some markets due to “barriers” such as time differences and residency requirements. Making an effort to overcome these blockages will set your business apart and make a real difference to those in markets where the domestic resource is typically more expensive and less abundant in the first place.

Diversify your product portfolio

One last thing that has been brought into the spotlight in recent months is the importance of diversifying your product offering. It is so important not to over-index and rely on a part of the business that may be doing well today – as this may not be the case tomorrow.

Some features that Papara has implemented have been a foreign currency exchange that offers attractive rates and a budget management tool that provides support to our customers when they want to understand and manage their finances. Looking forward, we plan to introduce microloans, salary advances, credit cards and eventually an equity investment feature.

In the past, it has been the firms with the most functional variability that have tended to mitigate risk, worse market downturns, and come out the other side still intact or – in some cases – in an even better position than before.

Ahmed F Karsli is the founder and chairman of the board at Dad.