It’s no longer news that the fintech industry has been experiencing some tremendous growth in recent years. The industry was valued at $5504.12b in 2019 and expected to grow at a CAGR of 23.58% until 2025, according to the Global News Wire.
Stats compiled by Fortunly show that fintech companies acquired $135.7b investments in 2020. The fintech revolution is so disruptive that 90% of incumbent financial institutions believe that a part of their business will lose to standalone fintech companies in the next five years.
However, as the industry continues to rise in leaps and bounds, there are challenges for startups and established companies. Increasing regulations, cybersecurity, and competition (in its various forms) are among some of those bumps on the path of the fintech revolution.
In this article, we look at how content marketing, which has been causing a revolution of its own, can solve some of these problems and remove the impediments to the next wave of the fintech revolution.
Some top problems fintech companies face
As the fintech revolution continues to enjoy global penetration, there are bumps on the road. Some of those bumps include:
“There is increasing pressure on Fintech startups, globally, to address and deal with existing or potential regulatory hurdles,” said Richard Harroch, Managing Director of VantagePoint Capital Partners, and Melissa Guzy, Co-founder of Arbor Ventures “…in the United States, Fintech companies must comply with both federal laws and a patchwork of state laws.
Although certain federal agencies and state regulators have voiced support for promoting Fintech innovation by simplifying the applicable regulatory regime, in the near term, Fintech companies should expect to engage specialized legal counsel experienced in navigating the morass of laws, regulations, and court decisions that could apply.”
But the regulation challenge is not limited to the United States. Talking about fintech companies and regulations in the UK, Shameer Sachdev, founder of Growth Gorilla, said: “Playing a game with strict rules isn’t new for traditional financial institutions, and they’re well-equipped with entire risk teams devoted to keeping them compliant. However, smaller FinTech companies often operate with fewer resources, so risk and compliance may come down to a single team member, which can be a major stress.”
A total of 15.1 billion records were breached in 2019, a 284% growth from the data breaches in 2018, according to data from NordVPN. The data also shows that the average cost of a data breach is $3.86 million.
Why is this important to fintech companies? “Data privacy, cybersecurity, and data breach issues are especially important in the Fintech space,” said Harroch and Guzy. “Fintech companies often have access to highly confidential information on individuals: Social Security numbers, credit card information, net worth, income, and much more.”
Harroch and Guzy also noted that these hackers are now more sophisticated in their techniques, making it more difficult for fintech companies to ward them off.
In 2019, businesses spent an average of $11.7m shoring up their cybersecurity. In 2020, the average company spent 16% of its IT budget on cybersecurity, according to the 2020 State of the CIO survey. In 2021, businesses are expected to spend $6t globally for cybersecurity.
The cost of cybersecurity and data breaches can be a huge burden to fintech companies, especially startups. Moreso, the fear of cyber-attacks can be a big turn off for many consumers who would otherwise have used a fintech solution.
The tradeoff between tech and the human touch has always been a huge discussion in business circles. While automation and bots simplify business processes, some consumers want a human touch- interact with fellow human beings who can show empathy.
Fintech is tech (obvious, right?). It depends on the use of technology to simplify the financial lives of individuals and businesses. How can fintech companies be techy without losing touch with the human consumers of their tech? That’s a big challenge for many.
“One key area in which Fintech firms can fall behind traditional financial companies is through the absence of the ‘human touch’, with their operating models often leaving clients to feel like they are dealing with some faceless entity,” said the Global Banking and Finance blog.
“Because innovation and tech are the strengths of Fintech, it’s easy to assume that all customers want newer, faster, more automated services,” said Chris D’Antuono, Fintech lead at Currency Cloud. “However, Fintech institutions that make that assumption risk drifting out of touch with customer needs.”
Fintech companies must learn how to keep the conversations going, understand customer’s needs, and create meaningful experiences on steroids for their customers.
The competition fintech companies face is two-sided. On the one hand, they compete with traditional financial companies with successful brands. On the other hand, they compete with other fintech companies.
Harroch and Guzy summarized the first type of competition in these words: “Today, Fintech companies don’t only compete with the large existing financial powerhouses, such as Goldman Sachs, Citi, or PayPal, but they soon will have to contend with Amazon and other technology companies expanding into financial services.”
Staying ahead of the competition (whatever the type) is a constant struggle for fintech companies. The need for continuous innovation and successful marketing is ever-present.
Acquiring early adopters and new customers
Here are Harroch and Guzy once again: “Getting early revenue traction is critical to determining initial product market fit. Early adopters are important for this reason.”
Early adoption is especially a problem for B2B fintech companies who have a longer sales cycle than their B2B counterparts.
Gaining new customers can also be a big problem for many fintech companies, especially given the ongoing competition (evidenced by the relentless innovation that pervades the industry).
Content marketing in today’s economy
Today’s consumers are becoming more uncomfortable with ads. 27% of internet users in the United States use an ad blocker, it was 15.7% in 2014, according to data from Statista.
Consumers don’t want to be sold to; they want brands that will go out of their way to create meaningful relationships with them-treat them as actual humans rather than names on a CRM software.
In this new world, businesses now realize the need to create ongoing relationships with consumers and deliver meaningful experiences that are mutually beneficial.
Content marketing has proven to be a solution for these businesses. I once wrote that “Content marketing is the subset of inbound marketing that caters to the production and promotion of the content that provides value to your target audience by meeting their needs.” Content marketers produce content that solves consumers’ needs and create and maintain constant interaction and engagement with them.
Content marketing is how business brands “stop interrupting what people are interested in and be what people are interested in,” according to Craig Davis, former Chief Creative Officer at J. Walter Thompson.
“Traditional marketing talks at people,” said Doug Kessler. “Content marketing talks with them.”
In this new world, “content marketing is all the marketing that’s left,” said Seth Godin, a marketing guru and author.
How content marketing can solve these problems
Does content marketing produce results? That’s the question! Well, the data shows that it does.
Here is a good summary from a previous article:
“Content marketing generates 3X more leads per dollar than outbound marketing, even though it costs 62% less, according to Demand Metric. 72% of marketers believe content marketing increases engagement and leads. “Content Marketing provides 4x the ROI of our traditional marketing spend,” said Julie Fleischer, a strategic advisor at Encantos.”
The more pressing question is how content marketing can help fintech companies. However, instead of looking at the benefits of content marketing in general and applying them to fintech companies specifically, I believe it’s better to look at how content marketing can solve the biggest problems fintech companies face.
But before going down that road, I need to make a detour and identify the four major types of content, according to Copy Blogger. Here they are with some brief comments (from a previously published article):
- Attraction: “These are the content optimized for the search engine. The goal here is to get brand awareness and visibility. By writing on topics that your target audience is searching for, you will attract them to your brand.”
- Authority: “These are pieces of content that establish you as an authority on specific topics. Authority content can also serve as attraction content for prospects. However, they do more than attract; they help prospects and customers to understand your POV (point of view) on essential subjects. As Robert Rose, content marketing strategist, says it, “Traditional marketing and advertising is telling the world you’re a rock star. Content Marketing is showing the world that you are one.”
- Affinity: “The goal is to communicate your identity and values to prospects and customers. These pieces of content highlight your brand positioning, your goals, and your approach to key issues in the industry. You can also use affinity content to anticipate and answer prospects’ objections.”
- Action: “Action content intends to take prospects further down the funnel.”
(These content can be text, images, graphics, audio, video, and a combination of some or all of them)
So how can content marketing help fintech companies?
Regulations and Cybersecurity
While there is a company side to regulations and cybersecurity, there is also a consumer side. Consumers care whether the companies they associate with are ethical, safe, and trustworthy. The more ethical, safe, and trustworthy they perceive you to be, the more comfortable they are doing business with you.
The important word here is “perceive.” That word is important not because you can fail to meet regulatory and cybersecurity standards and pose as if you do, but because you need to let the consumers know you are meeting them.
Your adherence to regulatory and cybersecurity standards may be top-notch, but if your consumers don’t know that, they won’t trust you more than they do the competitor who screws those things up.
To create and increase trust and confidence among the consumers, fintech companies need to create and promote affinity content that shows, in a way consumers can relate to, how much you value regulatory and cybersecurity standards.
Again, this is not a tactic for deception. If you are not doing well in these areas, you need to do something about improving. But if you are doing things right, you need to blow your horns- shout it at the housetops.
Create affinity content that communicates how much your consumers’ cybersecurity is valuable to you and how much you are doing to ensure such security. Do the same for the regulatory standards in your industry.
Build trust; no successful brand exists without it.
What’s the best way to solve the “human touch” problem? It is not by scaling down on technology and automation. Instead, it is by establishing and maintaining constant, useful, and valuable communication with consumers.
Consumers have needs that they want you to meet. They have questions they need answers to. They have problems they want you to solve. Create content that will meet their needs, answer their questions, and solve their problems. Educate. Inform. Entertain. Then do it over and over again.
And when you create such content, ensure they have the quality to establish engagement with your audience. Create as much communication channels with your consumers as they want. Know where they congregate, interact with them, understand them, and provide value to them.
Don’t just start a business blog, open accounts on various social media channels. Create valuable newsletters. And never stop engaging with them.
Explore every opportunity to personalize your content for the consumers. Understand every consumer-needs and preferences-and serve them content on their terms. The more they feel you “get them,” the more they like you, and then the more loyal they are to your brand.
Every type of content (attraction, authority, affinity, and action), if done well, can achieve this goal.
There are two ways to stay ahead of the competition: lower your price or build a brand. If you are pursuing excellence and long-term success, the first option is out. The only option is to build a brand and then acquire customers who are loyal to that brand.
But customers won’t be loyal if you are not different from your competitors. Identify your unique selling proposition and core competencies and communicate them to your audience. How do you do this? Create affinity content.
Another way to beat the competition is to be the expert that the consumers know, trust, and love. If a company is the best in the industry, but they don’t talk to the consumers, it’s of no use. A company that does not have their expertise but communicates with the consumers is the expert in the consumers’ eyes.
You might not be the most knowledgeable in the industry, but if you are the one the audience know, trust, and love, you are the expert.
So create authority content that shows your expertise in your industry. Create the type of authority content that shows you understand your target audience’s needs, questions, and challenges. Once they know, trust, and love you, you have the brand loyalty you need to stay above the competition.
Here is where fintech companies have an advantage over traditional banks. As digital-native brands, fintech companies understand digital platforms and networks. Now use that to your advantage by becoming the expert that the people know, love and trust. Again, educate, inform, and entertain; do it like an expert, or rather, the expert.
Early adopters and new customers
Attraction content are important to get early adopters and new customers, especially if you know how to use storytelling as a content strategy.
If you produce the kind of attraction content that ranks on Google’s first page, you can create the awareness you need for early adopters and new customers.
Find topics (and keywords) relevant to your new fintech and create content that will outrank the page that is first for those topics and keywords. Then ensure that the content you have for that topic or keyword is good enough to capture and sustain readers’ attention.
Also, ensure you have excellent action content scattered throughout the piece-the type of action content that makes people want to sign up immediately.
If done well, content marketing remains the best low-cost way to find early adopters and new customers on auto-pilot.
Content marketing is all the marketing that is left in today’s business world. Fintech companies can use content marketing to solve the five major problems they face: regulations, cybersecurity, human touch, competition, early adopters and new customers.
By creating excellent attraction, authority, affinity, and action content, you can gain consumers’ trust, create meaningful relationships with them, stay above the competition, and gain early adopters and new customers on auto-pilot.
In the next post, we will look at some fintech companies that are making good use of content marketing-what they are doing well, what they are doing wrong, and what can be improved.
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If you want to know more about how content marketing can help your fintech company, contact me.