It Pays to Have a CX Partner Covering Your Back as Your Fintech Scales Up

4 minute read, posted on 06/03/2024, by David Holton

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Most innovation in the banking and financial services industry is now taking place in agile startups that are powered by financial technology – fintech. This technology-led approach to financial services has some very distinct advantages over the traditional product-focused banking and insurance companies.

New services can be designed from a blank page. They are extremely customer-centric because they are designed now, for use by modern customers. Your retail bank with hundreds of main street branches is probably using a very similar process for opening a line of credit compared to what they were doing several years ago – even if some of the paper documents are now online forms.

Some of the fintech brands are now well known and used by a large customer base. Examples include Stripe, Robinhood, Wise, and Revolut. Some are offering a full range of banking services and some are focused on doing one thing really well.

But there are hundreds of less well known fintech brands that want to grow larger. What is holding them back? There are three main challenges that any new fintech needs to overcome when they try making that leap from scrappy young startup to respected financial service company:

  1. Attract customers: this sounds obvious, but it can be achieved in a number of ways. There is organic acquisition through marketing and advertising, a similar service might be acquired to give an instant boost to user numbers, or the fintech may be able to partner with a large, more traditional, financial service company – such as a bank looking to offer new services to their large pool of customers.
  2. Boost compliance: as volumes increase, so does the requirement to ensure compliance with banking regulations. There is a long history of exciting startups that struggle to comply with capital requirements and how to use customer data. It can stop growth almost entirely as banking regulators do not allow rule-breaking operators to continue.
  3. Improve CX: the startup focus is usually on grow and acquiring customers, which can leave customer service on the back burner. However, as customer numbers increase you will need to take a more robust approach to how customer interactions are managed because customers of financial service companies expect prompt and reliable service – not answering a customer creates doubt about your new service.

A strong business process outsourcing (BPO) partner can help with many aspects of these requirements. Marketing the business is your own problem, but ensuring the back office is compliant with financial regulations and offering a world-class customer experience is where a great BPO can really deliver.

A strong and insightful BPO partner knows what the regulator needs, they have experience with other financial service companies. They know how financial audits work and which competences need to be demonstrated.

They can also use enabling technologies, such as artificial technology (AI), to stay ahead of the compliance curve. This article describes how AI software can cross-check customer ID documents so processes such as account opening can be dramatically improved – most manual checks can be managed by the AI.

As fintechs scale up they also need to think much more carefully about how customer data is stored and managed. Data security becomes a critical concern – imagine trying to attract new customers if a news story is splashed across the media explaining how your systems released the personal financial details of all your customers.

IBM has estimated the average cost of a data breach like this to be nearly $5 million, but the cost to smaller companies is even higher – the majority will close within a few months of the breach.

So if you are considering how to scale your fintech then you need to consider data security, regulatory compliance, and the customer experience before the marketing team starts pulling in new customers.

Fintechs always want growth, but growth can be hard to handle if you are not ready for it. A reliable CX partner who understands banking regulation and customer service can make all the difference.

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