Keeping up with trends might be enough in some industries, but not fintech. The fintech space is especially fast-moving and ever-evolving. Only companies that get out ahead of trends succeed.
This has been true in the fintech world for quite some time, but staying ahead of trends is even more important as we look toward the five year horizon.
Cathie Wood, CEO of ARK Invest, discusses this idea brilliantly: “Innovation in financial services is on a 5-year horizon. Invest now or miss the boat.”
Put another way, work with the tides of change in this moment or risk a decade plus of catching up later. For clues on how to stay relevant now and in the future, consider three trends we’re seeing that aren’t going anywhere.
1. Exceptional UI Design is Table Stakes
Financial institutions without great UI (we’re looking at you, legacy banks) have a lot of work to do. Why? Because great design, a UI that’s both beautiful to look at and easy to use, is simply table stakes in today’s world.
The best companies are creating exceptional user interfaces from the very first version of their product. It’s a given because your customers won’t settle for anything less than what they’re used to — and, in fact, they often demand even more.
The directive for more old-fashioned apps is evident: Update your UI or die.
For already innovative and newer fintech startups, the message is to update your UI regularly, too. Because, even though it’s cutting-edge right now, you could be the legacy system on the other end of the five year horizon. Don’t sleep on the UI and design once you’ve launched, no matter how successful you are in this moment.
Robinhood Proves User-Friendliness Matters
Massive numbers of people are flocking to Robinhood to trade stocks, and much of the app’s success can be attributed to their fantastic UI.
Robinhood has engineered patterns and laid out their product to mimic users’ favorite every day apps. It’s incredibly intuitive. So intuitive that some have flagged Robinhood as risky, saying novice investors might take bigger chances and lose more money because the app takes almost all of the barriers to trading away.
Regardless of your personal opinions about Robinhood, their UI has made them a hit among users. And that’s noteworthy as you evaluate your own design.
Webull Proves You Can Be Modern and Informative
As mentioned, Robinhood has been criticized for their maybe-too-easy trading features. On the other end of the spectrum, legacy fintech giants like Citibank and Schwab are trailing the pack. They provide robust functionality, but lack the polished UI and slick interactions we see from challenger banks.
Enter Webull. WeBull has borrowed from the detailed nature of Schwab and the modern UI of Robinhood to create a user friendly trading option with richer data.
Importantly, Schwab and the like can no longer use their abundance of investment information as an excuse for clunky UI. Webull has proven that both are possible.
Now, customers have their choice. Do they prefer the simplicity of Robinhood or the additional detail from Webull? Notice that the legacy option isn’t likely in the considered set at all.
Here’s the bottom line: Update and maintain your UI or you could be obsolete post-five year horizon.
2. Product Mixes are New Sources of Innovation
Innovating is difficult. But many challenger banks have taken a different approach that makes innovation slightly more accessible.
Rather than start from scratch, they’re taking existing products and mixing them up in one interface. They can then attract more specific types of customers. And, with a compelling and niche value proposition, their long-term value increases exponentially.
Product Combo Case Studies
Deposit accounts aren’t interesting or special. Banks have been providing people with a place to put their money since banks were invented. Financial reporting isn’t all that unique either. The same goes for cash flow analysis.
However, Mercury has combined all three capabilities to provide rapidly growing startups with a single platform for all of their needs. Mercury is addressing an overlooked customer pain point — the annoyance of jumping from Quickbooks to banking apps and so on — by packaging everything together. All with a seamless UI, of course.
Gather also leveraged an existing technology in their app. They took personal financial management (a long available tech in the industry) and repurposed it for a whole new target audience — couples.
Financial disputes are a major source of marital strife. Gather saw this and stepped in with a lighthearted, easy option for partners to get an overview of each others’ transactions without the accusations and fights that so often come with these conversations. This could easily extend to anyone who shares finances, like roommates.
Mercury and Gather didn’t even have to recreate the technology wheel to become big hits. Instead, they both meet a customer need with well-established technology wrapped in a new package for a select group.
As you consider fintech innovation in view of the five year horizon, think about ways people are using your product and your competitors’. What ancillary services could you provide that would cut-down on the number of tools your customers need? Therein could lie your next big idea.
3. Barriers to Financial Transactions Continue to Fall
As transaction speed and globalization continue to flourish, customers are becoming less tolerant of friction in digital platforms. Think about how Schwab pioneered commission-free trades. That’s a non-negotiable feature for all retail investment platforms today.
Customer pickiness will only continue, and the fintech industry will be forced to continually remove barriers impeding smoother transactions.
Take another example. What was the easiest way to pay back your friend after a shared meal five years ago? PayPal? Too many steps. Cash? No one has that on hand. That’s where Venmo came in. They removed nearly every barrier to sending cash — essentially, it’s one click away. Venmo, along with others, has paved the way for simpler financial encounters.
In sum, this means you need to consider what financial barriers the next five years might break so you can work to break them ahead of the pack.
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