What Happens When Fintechs Grow Too Fast? Costly (but Fixable) Problems

Written by GaintheLead

October 25, 2021

The fintech industry is ultra-competitive and growth-oriented by nature. Even during the height of the pandemic, a time of suppressed economic activity, fintechs not only prevailed but also expanded operations and improved access to financial services across the globe. 

And they aren’t slowing down anytime soon. 

A Deloitte study predicted that global fintech revenues would exceed €188 billion in 2024. That was a pre-pandemic assessment. It doesn’t account for the accelerated shift toward a digital (and cashless) world — or the astronomical growth of fintech investments over the last two years. During the third quarter of 2021, the fintech industry received $36.2 billion of funding, the most of any quarter since 1998. 

As the world continues adapting to the pandemic, sales growth for the financial services industry has even more room to run. Payments, wealth management, asset exchanges — consumers expect these activities to be digital. They have an expanding appetite for new features and product differentiation, spurring even more competition and growth among fintech firms.

Long story short, it’s a good time to be in the fintech space.

But what happens when fintechs, like payment providers, grow too fast?

  

The Unexpected Problems of Rapid Growth as a Payment Provider

Growth tends to have a positive connotation, but there’s a difference between growth and sustainable growth. 

The growth trajectory for the fintech space is clearly trending upwards. While that’s encouraging, it can mask the impending problems that are likely to afflict numerous payment providers over the coming years. 

Let’s discuss a few of them.

Internal turmoil around company priorities and KPIs

What happens when your company grows? Your organizational structure grows too. Departments form. New leadership takes their appropriate seats. Priorities shift. KPIs become more numerous and sometimes complex.

Growth breeds change — and, in many businesses, internal turmoil. 

Without the right sales tools, individual goals and processes can conflict with those of other departments as the company grows. For instance, prioritizing a certain initiative or focusing on a particular KPI could take away from the efforts of another. 

Misallocated resources

As businesses grow, access to capital tends to increase. That said, deploying that capital becomes harder and harder. Why? Because operations are broader. More people are involved. Projects are larger in scope. 

Simply put, the stakes are higher. 

When growing fintech companies misallocate resources, their bottom lines can take a massive hit and their capital can dry up quickly.

Misinformed decisions and inconsistent communication strategy

Picture two Olympic sprinters of equal ability. Who do you expect to win in a 100-meter race? The one whose path is littered with hurdles — or the one who has a clear path to the finish line? 

Speed and efficiency are paramount in the fintech space. Yet, budding companies often create (and stumble over) their own obstacles. The culprits? Misinformed decisions and an inconsistent communication strategy. 

Data drives decisions in today’s world, but how are growing companies supposed to determine whether one project is better than another? Or if a particular feature will enhance customer value and boost retention? Or if their target audience is actually their ideal audience?

If and when there’s a disagreement about these questions within your ranks, how will you respond?

These questions can plague companies as they expand if they aren’t prepared.

 

How Payment Providers Can Generate Sustainable Sales Growth

Managing growth is an onerous task, but a mandatory one as a payment provider in a constantly evolving industry. If your business has experienced rapid growth, you’re probably familiar with one or more of the aforementioned issues. 

So, what can you do to navigate these growth hurdles? How can you adopt the right sales strategy for your business? 

Fortunately, it’s not an unfixable mystery — Gain the Lead can help. 

We offer a unique and proven sales software that helps fintech companies determine where to allocate resources in order to deliver the most customer satisfactory (and profitable) results. We’ve helped companies reach their annual sales performance objectives, optimize staffing, identify the most value-generating customers, and — most importantly — clear the path to sustainable and long-term growth. 

Are you next?

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