Traditional financial institutions and FinTech companies have been alternating between collaboration and competition for a while now, yet the FinTech revolution has a long way to go: high street banks still own 90% of the market and a lot of R&D tech investment continues to focus on upkeeping legacy systems.
But the unfolding COVID-19 pandemic may have changed the situation. The shift to working from home has, in general, benefitted the FinTech industry, tipping the scales in their favour: it’s a lot easier to operate remotely when you’re a distributed team working on digital services, than when you’re a high street bank with thousands of employees working in physical branches. Plus, in the 2020 Edelman Trust Barometer Spring Update, we saw that trust in financial services had risen six points between January and May 2020, suggesting that people are seeing the industry as rising to the challenges of the time.
So how can FinTech companies continue to do the right thing not just for the short term, but for the long haul? How can they remain attractive to investors and continue to meet customers’ needs? At Edelman, we think that PR forms a key part of the equation.
Here are our thoughts on the challenges and opportunities in FinTech, both now, during the crisis, and after it – and how PR can support the sector in the next stage of its growth.
Overcommunicate, be transparent and empathise
Traditionally, FinTech disruptors are far more transparent than financial incumbents. And we’ve seen them play well on that edge during the early stages of the pandemic. Scaleups such as Klarna, TransferWise, Athena and Monzo have all dialled up the dialogue with their customers, issuing very personable letters from CEOs and making them feel heard and understood. Revolut and Monzo have also published COVID-19 FAQs to proactively answer anxious customers’ questions and put minds at rest.
The lesson here is: over-communicate online and offline, both to investors – about team changes, tougher credit policies and measures taken – and to customers, with regular advice to manage unexpected financial challenges and content that is genuinely helpful to them at this time.
In our Edelman Trust Barometer Special Report into Brand Trust and the Coronavirus, 84% of people were looking to brands to become educators, offering instructional information about Covid-19. Demonstrating empathy and humility in C-level communications will also increase the emotional connection consumers feel with these brands – and will help create and retain trust for the long-term.
Showcase your proactivity and leverage your experience
One of the financial sectors most affected by COVID-19 right now is alternative lending, with credit default rates spiking. But the sector is also an example of agility and proactivity: Funding Circle was the first marketplace lender to join the UK’s Coronavirus Business Interruption Loan Scheme. And Zopa recently took part in a Northzone event to share its learnings from lending during the 2008 financial crisis and has published a blog post outlining all the ways in which it differs from other peer-to-peer lenders.
Meanwhile, on the growth side, FinTech companies such as savings apps, robo-advisers and SME lenders and service providers are still raising money: ANNA, Anyfin and Capital on Tap have all announced significant fundraises recently and proved there was momentum in their business. Of the companies who are creating something positive in the midst of the crisis, those who demonstrate their ability to adapt and thrive in difficult circumstances will be the ones customers and investors choose to give their money to.
Differentiate, Differentiate, Differentiate
As we progressively reopen the economy, the payments, personal finance and core infrastructure sectors will continue to get a lot of attention from both customers and investors – but the number of players – new and old – is overwhelming.
Building a strong customer base will therefore be challenging and communicating early and clearly about how you are innovating and what you bring to the market will be vital, in order for companies to achieve any real scale.
This is especially true for organisations looking to target traders and retailers that need to invest in their payments infrastructure to cope with the increased pressure to offer contactless options. If you express your differentiator well, you can build the type of traction we’ve seen with recent fundraises like Modulr, PaymentSense, SumUp or Checkout.com.
A lot of savings and personal finance start-ups have a great product, but few have gained real scale. However, early indicators from the pandemic show that consumers are now looking at savings services at a rate we’ve never seen before. And companies such as Chip, Neyber, OakNorth Bank or Tandem raised significant sums recently. By building real, at-scale customer adoption – which a PR and digital marketing strategy that brings their differentiators to life can heavily support – other businesses can follow suit.
Finally, businesses that provide core services for traditional financial services’ backend infrastructure, such as Ezbob, Rapyd, x10 banking or TrueLayer, find themselves in the midst of a huge market opportunity. Overhaul of legacy systems and investments in new, improved infrastructure will be front of mind for financial institutions when they come out of the crisis. FinTechs that want to get CROs, CIOs and CFOs’ attention should therefore make smart use of their content and amplify any significant partnership they sign, to build up their credibility and prove they’re offering something that can’t be replicated.
Looking ahead
As our “new normal” emerges, FinTech will continue to be a sector where there is money and opportunity. We will undoubtedly see consolidation in the industry and changes to customer expectations. Therefore, to scale, build a strong customer base and become ready for acquisition or IPO in a post-COVID-19 world, strategic communications and PR will prove a solid investment.