The right way to build a fintech

The UK is a world leader in financial services, and its fintech scene is thriving.

To bolster and future-proof operations, putting customers first is key

Investment in the sector has reached an all-time high, with UK fintechs attracting a staggering $24.5 billion in the first half of 2021. And with there now being an estimated 2,500 fintech’s in the country, it’s clear, if it wasn’t so already, that the term is far more than just a buzzword.

But, getting to the stage of multi-million-pound investment doesn’t come easy. And constant regulatory changes, the complexities of markets, and ever-growing competition means that building and launching a fintech is no easy feat.

But new fintechs shouldn’t have to struggle getting off the starting block, nor should they allow themselves to be limited by these factors.

There are a number of things fintech entrepreneurs need to account for when launching their business, but getting back-end processes right in order to create an excellent customer experience is by far the most important. The ultimate question is, how can you do this from day one?

Partner with a like-minded player

Businesses across all industries have transformed their products and services to meet the demands of a society fed on a constant supply of instant access.

Take payments – a huge part of the instant economy. Recent research revealed that some 82% of consumers now expect digital payments to be instant and convenient.

And, contrary to popular belief, appetite for instant payments isn’t restricted to the younger demographics. Over two thirds (65%) of over 65s are open to using new financial services or payment methods that make things quicker and more convenient for them. So it’s clear that organisations must prioritise meeting these expectations from the start.

In building a fintech, all entrepreneurs need to recognise that they operate within the instant economy, and they need to partner with those that recognise this too. Collaboration with like-minded firms will go a long way to ensuring a harmonious working relationship, while keeping instant economy thinking front and centre at all times.

But fintechs can also go a step further. To really move fast and scale nowadays, they need to be prepared to make strategic changes to their infrastructure when and where necessary. And they can do this by utilising all the tools available to them.

Harness the butterfly effect of payments

There is a direct link between payment technology and customer experience. And this doesn’t just apply to consumers, but also to corporate customers. After all, we all expect streamlined, instant access to services, both in our personal and professional lives, and this is particularly the case when it comes to sending and receiving payments.

Research conducted in late 2020 found 62% of payment professionals believe the hidden costs of current payment processes actually overshadow the hard costs (i.e. known costs like salaries and overheads). And the impact on customer experience and brand reputation was considered to be the most harmful and costly.

Clearly, fintech entrepreneurs need to avoid these potential hidden inefficiencies. And they need to make this a priority if they are to succeed in the instant economy.

To build a fintech correctly, it’s important to choose the right back-end systems from the get-go, as these can have a considerable impact on front-end outcomes, including customer experience – it’s what we call the butterfly effect of payments.

A good example of this is choosing single, immediate Faster Payments for loan disbursements over batch-based payment processing. Your customer service teams will thank you because your customers won’t be chasing them to find out where their money is thanks to near real-time payments and instant notifications.

Entrepreneurs should also build their fintech on a powerful API platform. API-enabled payment processes are easily integrated and provide companies with faster and more reliable ways to move money. Through API, businesses can automate payment flows, embed payments and build entirely new payment products and services managed in real time.

Don’t let customer experience flutter by

Building a fintech is hard. But to bolster and future-proof operations, putting customers first is key. While partnering with like-minded firms is a necessary step, it’s only half of the battle. Business leaders must identify the possible pitfalls, and in many cases, this starts with payments.

By identifying and avoiding potential back-end payment inefficiencies from the get-go, entrepreneurs can build on the firmest foundations while prioritising customer experience and putting themselves in the best position to thrive in the future.