FinTech’s one of the fastest growing industries in the world as well as an industry that’s booming in many different markets. Since the financial crisis of 2008, investment in this sector has expanded rapidly and innovation has continued apace. FinTech is a highly disruptive force not only on the traditional financial sector but on wider business and society.
FinTech startups tend to be nimble. Unlike conventional financial institutions, there isn’t a well-established body of regulation encircling their movements. Unlike traditional high street banks, there’s no lumbering physical presence in bricks-and-mortar stores that need to be factored into any expansion or contraction.
And unlike many conventional institutions, they have a high comfort level with tech and a low level of legacy systems to overcome if they want to use it to grow faster.
FinTech businesses aren’t constrained by geographical boundaries in the same way as more conventional financial services. Technology can be applied at scale to solve customer pain points and meet the needs of modern consumers – particularly younger ones. And without reliance on cumbersome physical infrastructure, they have the ability to scale rapidly.
Small but nimble: FinTech like crowdfunding, mobile payments, and money transfer services are revolutionising the way small businesses start up, accept payments and grow – especially in emerging markets.
Despite these advantages, FinTech companies still face challenges as they attempt to scale up. It’s tough to spread through viral word of mouth when customers are coy about discussing finances with friends.
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It’s hard to convey credibility when you’re a new brand and a new financial concept. And it’s hard to convince customers that your solution meets their needs better than an established provider, or one of the many other FinTechs active in a market.
How you establish trust is a major component of gaining traction with any FinTech product. And to grow, it’s essential to find ways to build trust with new audiences. This means adapting the offering to suit the needs of each new market and offer reassurance that’s tailored to their specific concerns.
The translation challenge
One major component of this is effectively translating your services into the local language. That’s not always as straightforward as it sounds.
FinTech businesses tend to have a reputation for being unstuffy, which often means they communicate in a refreshing way compared to more traditional financial institutions. They’ll find a way to communicate their unique value proposition in a way that really connects to audiences for instance, or they’ll write plain English-style terms and conditions.
Communicating well is a big part of FinTech effectiveness, but it’s hard work adapting this to new language audiences.
It’s not always easy or straightforward to translate a FinTech website to a new market when it’s designed to such high communication standards. Getting the brand voice right is tough in your home market, let alone in a less familiar one.
But there’s more to localisation than just language translation. FinTech organisations also have to tackle thornier issues such as how their product meets local needs and expectations.
Each market has its own assumptions about financial services, and this may include unique reservations about what FinTech can offer. FinTech organisations need to answer this issue in every market they enter.
Some markets are particularly ready to embrace FinTech – often ones where the formal banking system isn’t as well established. These markets may require FinTechs organisations to commit to educating their customers to a higher degree compared to audiences that are more accustomed to what to expect from financial service providers.
FinTech is thought to be a positive force driving financial inclusion in parts of the world where people haven’t generally participated in the formal banking system.
Counties such as Malaysia and the Philippines, in Southeast Asia, are prime target markets for FinTech organisations to expand and thrive.
KPMG highlights Southeast Asia as one area of the world where FinTech may help bring people into banking services. Here, FinTech has potential to help solve problems that affect people in this market, such as migrant workers wanting to send money home to their families.
In this case, neither party may have a formal bank account. New solutions in the area of low-cost money transfers without the need for either party to have a bank account could really solve a local need.
It’s likely that any solution would need to be localised to help people understand and use it. Users may be in rural areas and hard to reach through conventional communications or infrastructure, they may have shared mobile phones and may not have a formal or fixed address.
FinTech organisations moving into this market would also need to tailor their need for personal identification to what people generally possess in this market. It’s not a situation where a non-local solution can be transplanted successfully without significant adaptations being made.
Pace of regulatory change
FinTech organisations also face unique regulatory environments in each market they penetrate. This is also true for traditional financial service brands but these institutions often have a more certain regulatory environment and one that’s been established over long periods of time.
Legislative change tends to lag the pace of innovation in FinTech, which is one of the reasons many FinTech organisations are thriving.
They often thrive in regulatory uncertainty, taking advantage of the slow pace of regulatory change. When regulation governing their practices is introduced, it’s often ill-thought-out and inadequate at covering fast-changing FinTech practices.
If FinTech businesses can adapt their offering to suit different regulatory climates, they can move quickly into new markets before regulators can adjust. That’s why these nimble organisation can move quickly in new markets with a localised offer that’s suited to the local regulatory environment.
Ultimately FinTech organisations face the same challenges as any other business when they scale. How do they adapt their offering to meet the needs of new audiences?
It’s a challenge that needs to be met by a tailored solution for every new market. Localisation is about so much more than mere language translation; particularly when you’re dealing with a sensitive issue like peoples’ money.