May 11, 2021

Fintechs, you're "doing growth" wrong

Churning out funky new features will win fintechs early customers — but it’s no way to earn sustained growth.

Fintechs are among the fastest-growing companies in the market today. Take Revolut: the digital bank saw its users jump by 100% last year from 6m to 12m — and has already hit 15m this year.

Fintechs are also pretty damn good at churning out new features. Want to easily pay your mates for that dinner? Done! Want to donate your ‘round up’ to charity? Easy peasy! Fancy buying fractional stock to dabble in the stock market? There you go.

After spending two years as CPO of N26, I got to watch this space closely. And the ‘ship it to win it’ strategy isn't necessarily the way to hack growth.


The speed trap

Shipping features to market fast is the mantra of the fintech world. It is also what makes fintech feel a bit more like a race than any other industry. 

This obsession with speed is fantastic for early adopters. They love new things and even when it comes to their bank they want more functionality, they want new experiences and they really want new cards.

The challenge with this model comes when fintechs acquire early adopters who are just interested in trying out the new product on the market, no matter what it is. Hype and funky features will attract this lucrative user — but when the next ‘cool new product’ arrives with an exclusive beta programme, they’ll move on quickly.

What fintechs are faced with then is probably the following:

  • An organisation that knows how to ship features fast but doesn’t really think about who it’s shipping them to
  • A churn rate that is increasing as early adopters explore other new options 
  • A product which is not yet ready for the masses so isn’t being adopted fast enough to make up for the fleeing early adopters 
  • Noise dying down as their relevance tempers because they are trying to win new customers with the old pitch
  • Higher costs to acquire new customers and increasing costs associated with low-revenue users

This is why I believe fintech isn’t doing growth right. Getting growth isn’t a growth strategy.

Getting growth by taking products to market fast isn’t a bad thing but assuming that they will sustain your company forever is naive. 

How to grow — and keep growing

To sustain the growth of a successful fintech startup you need to very quickly define your growth strategy. Decide who the user is that you want to win, then create advocates of your product who will drive growth and adoption at low acquisition costs. This is the only way to grow at scale and at a level of profitability that meets the high expectations of today’s market.

You need to build your product with that user in mind, build your subscription model or your pricing model with that user in mind, and build your brand with that user in mind.

You also need to focus on growth metrics beyond just ‘number of users’, like:

  • X% of users in a subscription after 12 months 
  • X% of users upgrading in the first 6 months
  • X% of new users acquired via referrals
  • X % of existing users increasing weekly spend by 100% year-on-year (share of wallet)

Learnings from Revolut

I used Revolut’s growth as an example earlier for a reason. It’s definitely perpetuating the ‘ship it to win it’ mantra, but that’s not what drives its growth.

Revolut is very clear on who its customer is: male, driven professional, aged 28-45, early adopter. Interestingly, that’s also the make-up of its leadership team (but that’s for another article).

Revolut does everything to win this person, from the features it builds to its brand’s tone of voice. Crucially, this also underpins its expansion plans — after all there’s only so many of these people in every country. 

Revolut is so aggressive about attracting this specific user that it can be polarising to others. But that doesn’t matter, because Revolut knows:

  1. Who it wants
  2. How many of them there are 
  3. How to win them

I am not a customer of Revolut, and that is an active choice based on their brand and behaviours. I’m also sure it doesn’t care.

Revolut has focused on creating advocates in a very clear user profile and this is how you execute a successful growth strategy. Beyond that, shipping features might get you growth… but not forever.