February 06, 2019
Nick Murray-Leslie, CEO and principal at Chatsworth Communications, explores the growth of fintech and why “building a better mousetrap is better than napalming the kitchen” when it comes to PRing fintech firms.
Last year, the UK received more inbound investment in its fintech sector than any other country in the world – over $16.1bn during the first half alone. That puts it firmly ahead of China ($15.1bn) and the United States ($14.2bn).
That is a success story, right there. The silicon roundabout has not produced an Amazon. Or an Apple. But the city has produced Monzo, Cobalt, Transferwise, Previse and Funding Circle. All highly valued firms solving genuine issues in international markets.
London has delivered the perfect petri dish for the growth of the sector – access to talent, a comprehensive legal and regulatory environment, and an array of customers, partners and investors – producing dozens of outstanding, world-class, fintech firms.
There are hundreds of exceptional fintech brands, all with their story to tell of how they will reduce cost, duplication and transform redundant business processes. There are a lot of well-funded “better mousetraps” out there.
So what does it take to achieve cut through, sell your idea and secure that all important series A funding?
Chatsworth has some experience of this. We were the first dedicated fintech PR firm and have steered many firms through launch, growth, adoption or acquisition.
Fintech brands must create PR strategies which establish and maintain a credible narrative, without building undue expectations which fail to deliver. In short, it’s about next year, not just next week.
Everything you say and promise must be deliverable. A spun, short-term PR hit will be counterproductive if your promise to the market fails to materialise further down the road.
Smart fintech brands focus relentlessly on the issue they are solving, highlight and analyse it, then deliver the technology and service to meet that market’s particular need.
Markets and investors are, largely, not stupid. They know the nature of the hype cycle and resulting trough of disillusion from oversold tech. Just a cursory glance at the twitter feeds of various tech reporters and editors is all you need to know about the cynical kickback awaiting tech which has not delivered at the pace promised.
The single biggest PR mistake fintech firms make is to overpromise on their ability to transform a given market. The most common one is the promise to replace the banks and their role in the financial ecosystem.
With start-ups to the left and shareholders to the right, banks often feel like they are in the squeezed middle and that their lunch is under threat.
But in truth, finance and technology have become inseparable. Indeed, a common thread underpinning the most successful fintechs, particularly in the B2B space, is their ability to work in lockstep with incumbents.
Fintechs need the banks; they have the markets, connectivity and ultimately the influence over any change to existing systems. And the banks, for their part, have been excellent partners. They continue to engage and partner with fintechs – investing, beta testing and collaborating to solve industry-wide problems.
It was always going to be this way. The bulldozer approach of some self-titled “disruptive” start-ups, where you build an alternative system and then trying to slam it into an existing market, simply does not work.
Fintech has become largely synonymous with disruptive, transformative innovation, but this can be misleading. This mindset is largely down to the Bezos and Zuckerberg factor – inventors of technology which has literally transformed their chosen markets and sectors.
Expecting all technology firms to do that is a blinkered and unhelpful way of thinking. It leads us down a road where only significantly new or disruptive concepts are valued.
Does it have to be disruptive or game-changing? Often it is enough to evolve and improve.
Build a better mouse trap. Don’t napalm the whole kitchen.
The value of any fintech innovation is decided by the market, the investors and the adopters, not by the innovation labs at the banks, or around the table in one of the meeting rooms at Level 39’s fintech tower.
Small businesses are the backbone of the economy, but 50% of the total value of their invoices to larger suppliers are held up in late payments.
That causes horrific cash flow problems, which can lead to otherwise sound suppliers going to the wall and an ocean of bad publicity for larger buyers.
Up to the plate steps Previse, an extraordinary fintech firm led by brilliant people with a brilliant idea.
Previse uses Artificial Intelligence to enable corporate buyers to safely ensure they pay all their suppliers instantly. This eliminates the supplier’s need to rely on expensive short-term credit, lowering costs for buyers and giving SMEs the confidence to reinvest in growing their businesses and boosting the economy.
It works by using AI and smart tech to analyse the data of a large company to predict the very few invoices that are unlikely to get paid, so that the rest can be paid instantly.
This is not completely revolutionising the relationship between buyers and suppliers, it is enhancing and improving it using technology. A real tech solution to a real commercial problem – the mousetrap got better.
Then we have R3. This is the breakout success story for enterprise blockchain technology and has become a fulcrum for those looking to apply this technology to professional markets.
Their model of engaging and working with banks, financial institutions and regulators right from the start has paid dividends because their CEO is a veteran of the banking and trading world but also got fintech and electronic broking.
He didn’t look at the prize from the outside and build a platform off the peg. Rather, the team built their system in absolute lockstep with the markets.
They now have hundreds of partners and dozens of banks invested or working in tandem to address specific market challenges, ranging from trade finance to insurance.
It didn’t hurt that he was able to afford and assemble a team of professionals including some of the finest technical architects and coders of our generation.
So what ingredients make for a successful fintech? Firstly, the combination of financial markets experience and technical and engineering excellence within their teams.
Second, an absolute focus on engagement with the existing market infrastructures to work and define the use cases before development. They are not necessarily your competition. They are most likely to be your potential partners or acquirers.
And third, a seemingly inexhaustible supply of energy, drive, curiosity and intelligence.
So choose your advisers wisely and trust your reputation to the best hands. They will articulate and tell your story with confidence, creativity and commitment.
Here are Chatsworth’s four tips for ensuring success when working with fintech companies:
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