Three common challenges of a growing fintech company (and how to avoid them)

Written by GaintheLead

June 20, 2021

By 2025 the fintech industry is set to reach a market value of $305 billion. Just think about that. It’s slightly more than Chile’s entire annual gross domestic product.

But to reach that size requires innovation and corporate growth on a scale that would have seemed impossible just a few years ago. In fact, the sector is growing at or around 21% each year. So it’s no surprise that numerous financial technology firms are struggling to scale from start-ups, into mature companies. 

Below we’ve captured three of the most common challenges fintechs face and we’ve outlined how to avoid them.

01. A misalignment between product and sales departments

Product teams in early stage fintechs tend to centre their work on solving the most common and universal customer challenges. But as the business grows and the product gains market traction, product engineers often find themselves tackling customer-specific, bespoke requests.

This isn’t necessarily the best use of time and maybe it’s not even delivering a return on investment. But pressure builds from colleagues in sales, who want to impress their prospects.

If you’re a sales rep, having a large volume of leads is a nice problem to have.

But, as you engage with prospects, each tends to come with his or her own set of specific requirements. And this then needs to be relayed to product engineers to see if you can indeed cater to these requests.

Meanwhile, product teams are working flat out on what they regard as the most pressing customer issues. And no matter how many times you tell your product teams what you need, they never seem to be able to give it to you.

If you’re a product engineer, you might feel frustrated that you’re being asked on a whim by your colleagues in sales to build a specific capability for a prospect who hasn’t even commitment into a contract.

Who knows if they’ll ever become a paying customer?

How does this problem ever resolve itself? Well, either it doesn’t. Or, after a sustained shouting match, the team with the loudest person wins.

Conflict between sales and product teams almost always stems from the fact that each department is working to its own set of goals, which started out as the same, but diverged over time. And as the company scales, to-do lists get longer and those sets of goals separate further.

On both sides, employees get caught up in their daily activities, putting out fires and fighting to keep their managers happy.

While it’s the job of a sales rep to win as much business as possible, asking product teams to spend weeks on developing a bespoke solution – which, at best might not deliver a return on investment and, at worst, will never be purchased by the prospect – makes little sense.

Meanwhile, product teams which lack the agility and strategic foresight that’s required to succeed in this fast-changing sector, are likely to be wasting everybody’s time.

This problem typically arises as a company’s product hits the mass market. Instead of catering to the specific needs of certain customers, the challenge is turned on its head. How can you make the product robust, scalable and attractive to prospects?

The solution is to really understand your ideal customer. What do they need from you and why do they come to you in the first place? Only then can you ensure that both sales and product teams are working in harmony.

The area to address as your product moves into a mass market proposition is leadership.

This challenge emerges from the fact that, in order to move to a broader audience, you need to shift your strategy and realign the way you market, develop and sell your product.

And this requires the leadership of seasoned leaders who don’t just understand the challenge in front of them, but who can also bring about meaningful change among their teams and departments.

02. Ineffective leadership

If you joined an early stage fintech it’s not uncommon to be promoted into a leadership position rapidly, as the company scales. And if that happens, you’ll find your role transforms from carrying out tactical tasks, to spending at least a significant portion of your time project managing and catering to the needs of your team.

At least that’s what should happen.

And yet there is just so much to do. So, instead of leading your team, you remain focused on selling or carrying out other operational tasks for the overwhelming majority of your day. 

This leads to a number of challenges that tend to grow over time.

Firstly, managers under weak leaders tend to quit. Middle management employee churn rates are way above the average in fintechs. And that’s because they either lack recognition or don’t have the freedom and space to develop. Or both.

If leaders don’t pay attention to staff, they soon begin to lose valuable members of their teams.

That means they have to deal with lower productivity during the outgoing – and undermotivated – member of staff’s notice period. Then they need to hire, onboard and train their new employee.

The best part of a year will have passed by the time this process is complete, during which projects will have slipped and other employees may have handed in their notice, too.

Without effective team leadership staff soon feel there isn’t a future for them in the company and duly quit.

To ensure this doesn’t happen, newly promoted leaders need the support and training to enable them to succeed.

A good sales rep or product owner doesn’t translate into a strong leader, necessarily. With the right support in people management, freshly promoted management staff can apply the experience they’ve gathered ‘on the ground’ to become respected and effective leaders.

03. A lack of internal visibility to measure teams’ and individuals’ performance

Creating impactful leaders in your company is critical to success. But what happens when one of them loses sight of the strategic vision?

Hitting milestones, or key performance indicators, is an important part of a leader’s role. These are what defines success. And as companies scale at pace, there is often a tremendous amount of pressure on leadership to deliver.

But under these circumstances, leaders risk losing sight of the long-term vision. Drawing on an example we’ve seen in a real setting, a sales leader sees his or her team is attempting to win over business by offering some services for free. The sales reps know this is an effective way to win new business. 

The leader sees this in simple terms.

Sales targets are not being met. And yet we’re giving services away for free. He or she then proceeds to insist the team no longer offers anything for free again. And to seize on an opportunity to grow revenue – albeit marginally – the leader repackages the services that were being offered for free and invoices the prospects.

Of course, this not only leads to a disgruntled team of sales reps who feel restricted, but it deters numerous prospects and wastes internal resources in repackaging the previously ‘free’ incentives, into billable services.

Where did things go wrong?

It is not the lack of commercial focus on the part of an individual or team. Instead, it’s the absence of clearly defined goals and the ability to assess customer’s commercial contribution to the company in a meaningful way.

  • Do you measure this by the volume of transactions or impact on turnover?
  • When do you begin to measure this?
  • And how do you account for specific product alterations you created for that customer?
  • Or what was the opportunity cost of not implementing a product update?

So how do you scale your fintech?

Taking a Fintech which has proven its business model and turning it into a sustainable and profitable organisation is a big challenge.

All of a sudden, customers and employees start expecting more from the company and leadership. It can seem like there is no time to develop and deliver what they expect, because daily business is demanding.

Don’t ignore the problem.

At Gain The Lead we offer our vast experience in helping fast growing companies build their business and become a fully professional company which easily attracts & keeps the right talent. Our unique approach ensure we cover the right tools and leadership coaching to effectively align sales and product teams, and equip them for the significant growth challenges that lie ahead.

Appoint an external coach to:

  • identify & win profitable customers
  • implement the right processes to grow sustainably and keep their unique culture
  • attract and develop the right people
  • expand to new regions/countries
  • prioritise their development backlog to ensure they are developing what is needed for market success
  • work better internally to become more efficient and reduce lengthy discussions/meetings
  • execute efficient change processes
  • set up a corporate grade efficient HR concept

If you want to save time and shorten the learning curve to achieve workplace success, please contact us for an initial and informal exchange!

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