Dear Luc: Your most pressing fintech problems solved
In Dear Luc, we answer the questions the industry’s fintech founders are too afraid to ask, and solve the problems they don’t want their VCs to know about.
From regulation readiness to technology teething troubles, our start-up agony uncle, Luc Gueriane, is here to help.
Luc has over seven years’ experience working with flagship fintechs like Revolut, Transferwise, Monzo and Curve.
His expertise and extensive work in the fintech ecosystem mean that Luc is able to offer unique insight into the building of a successful fintech company.
Confession #1: The free ATM conundrum
Dear Luc,
I often hear about consumers over-using costly features like free ATM withdrawals. How can I put some controls around what customers are doing with my cards?
Although giving a user access to ATM withdrawals is standard for a banking proposition, it doesn’t necessarily mean you want withdrawals to be one of the main uses!
I will say upfront, there are a finite number of ways to control consumers usage of ATM withdrawals, but here are a few things that you should consider.
Firstly, you need to understand how your customers view your features. If you have several options that could be an alternative to ATM usage, then do you talk about those enough?
Don’t leave it to the industry or your users to promote that you have free ATM withdrawals. Instead, get people talking about your easy money transfers, your money management functionality, or personal spending insights. Highlight the benefits of keeping payments digital to your users and try to guide their behaviour away from cash withdrawals in the first place.
Secondly, although an obvious one, consider introducing ATM fees. If people are withdrawing cash too often and those customers are costing you money, you might need a fee structure in place.
Many well-known challenger banks have introduced a 3% fee for any withdrawals over a certain amount, so you wouldn’t be the first to do so. To not give customers a surprise when they receive their bill, Revolut now talks openly about “free within reason usage”. Customers can withdraw up to €200 over 30 days at no extra cost, and then a 2% fee is added thereafter to help you cover their costs.
Thirdly, try to think about alternative ways for your customers to access cash. Could there be an opportunity for you to create user benefits by partnering with retailers? Starling Bank partnered with the Post Office to enhance their offering, and one opportunity was enabling users to withdraw cash in Post Office branches.
Finally, if this has become an issue then you must ask yourself: are you targeting the right kind of customer? If users are wanting to load what are predominantly digital-first fintech products only to take cash out on regular basis, then you might be focused on the wrong demographic. You need to pivot your messaging to go after users who want a primarily digital offering instead.
Controlling usage of features is often like walking a tight rope – you want features to drive marketing and attract users, but over-use or even abuse of those features can lead to higher costs. If this continues to be a problem, in my experience, the issue is less about how the features are controlled and more about the kind of customer you’re attracting.
Do you have an embarrassing question you want answered, or a seemingly unsolvable problem you’d want help with? Post an anonymous comment below, or email FinTech Futures’ Alex Hamilton in confidence.
