Business

Why Product Personalization Is Key to Fintech Startup Success

Is there anything that Fintech startups can do to ensure their survival?

Startup Fintech companies are one of the hottest companies in the tech industry, and this is apparent by the number of Fintech startups worldwide that reached 26,045 this February 2021. According to research, the expected worth of the global Fintech industry in 2022 will be a staggering $309.98 billion. With the ever-changing customer behavior about banking, payments, and the COVID-19 pandemic driving people to seek alternative payment and banking methods, more and more companies are trying to ride the Fintech wave. In theory, starting a Fintech business is simple – all you need is a slick idea, an experienced developer, and investors. However, only 30% of startups stay afloat during their first year of business. With such a low percentage of surviving, what are the reasons Fintech companies fail? Is there anything that Fintech startups can do to ensure their survival?

Not knowing their products and customers is one of the top reasons many Fintech startups don’t make it. Startup Fintech companies often don’t fully understand their consumer’s behavior and offer the wrong product. But, product specialization might hold the key to combat this and ensure the company’s survival and success. 

Product specialization is a strategy employed by companies to streamline their products’ quality and benefits to adapt to the needs of varying market segments. As more Fintech companies move into the mainstream, knowing what potential customers want and need is a good way for Fintech startups to establish themselves as industry leaders through relatable and actionable content to show that they care about their clients’ needs.

So we can understand how product personalization can be a vital factor of a Fintech startup’s success, it’s essential to understand what product is specialization is and how it has helped established Fintech companies rise and stay on top.

Companies that employ product specialization as a strategy find a market for their products and services and focus on selling their products on that market. Fintech giant Alipay founded in 2011 and became Ant Financial in 2014 (now Ant Group), grew out of a consumer need for a trusted way to pay for goods from its parent company -Alibaba.com. Besides Alibaba.com, Alipay catered to the Chinese market by making it easy for anybody to use the service. There is no need for any device to use Alipay. It uses QR codes that require only a phone camera and an internet connection to make a purchase. 

Besides this, they only charge.6% to use their service, roughly half of what regular credit cards would charge. They willingly shared consumer insights with merchants to help them make the right decisions about advertising and marketing. Alipay knew what their customers wanted, and they acted on this, catapulting them to be the world’s Fintech giant.

Another reason startup Fintech companies do not survive is they spread themselves too thin to where they don’t know what they offer. Product specialization solves this issue by calling for the company to focus on a specific product or service type to build on. Sticking to one product ensures a very high level of quality and allows the company to become an industry leader in that line of products. One of the best examples of this is Paypal. 

Established in 1998, Paypal facilitates payments between parties through online transfers. Payment facilitation is what Paypal service when it started up to today. In Paypal’s history, it bought its significant competitors and cemented its claim as the industry leader in payment processing.

Although it had a rough start, the company refined its payment facilitation service to adapt to the ever-changing consumer climate. In time, Paypal became the household name of online payment. Until today people continue to choose Paypal despite the many competitors that have mushroomed over the years.

It is clear that employing the strategy of product specialization played a role in catapulting the Fintech giants’ rise to the top. Streamlining the product to respond to the ever-changing needs of the target market may hold the key in ensuring a fledgling Fintech’s survival and success in the very competitive and cut-throat business climate.

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