There is an app for that: fintech’s marketing challenge


A decade or so ago Apple famously announced: ‘There’s an App For That’. The advertising campaign highlighted that, through the magic of the iPhone, everything and anything was readily accessible. From food, travel and fashion to fun and finance, everything was just the click of a button away. But while the market buzzes with new ideas, many startups are not able to turn inspiration into sustainable businesses.

The UK’s flourishing fintech market

Since that moment, the fintech sector has exploded with its businesses in the UK representing the global vanguard. Investment into UK fintech businesses in the first half of 2019 nearly doubled on the previous year. That’s £2.15 billion according to research from Accenture. Digital banking and money transfer services are leading the way. MonzoStarlingRevolut and Transferwise are just some of the more notable names in the marketplace.

Innovation, engaged customers and rapid growth typify how many of these new players arrive in the marketplace. However, many face a number of key challenges in transitioning from successful startups to established profitable businesses. So why is that?

The challenge

New brands are entering into an incredibly competitive sector. Established players have resources and capabilities available to meet the challenge through a number of routes. For example:

  • Adjusting pricing to compete with fintech mono services
  • Partnering or investing with start-up directly
  • Or upping their own digital customer service standards

The Financial Conduct Authority (FCA) have been clear that they welcome the increased competition in the marketplace that fintech provides. However, they have been equally clear that the same regulatory standards and scrutiny apply. In growth mode the regulatory challenge and costs are considerable. In particular this applies as companies extend their product range from money transmission accounts to more complex and heavily regulated lending, savings and investments.

One of the key challenges is that many are fishing in the same tech savvy millennial pool that is naturally predisposed to try new, no or low cost tools. However, particularly in the case of the array of new digital banks, this is often in addition to rather than in replacement of their primary bank account. Consequently, the start-up can be faced with hefty operational costs managing millions of accounts whilst the core and more profitable activity continues with the established provider.

Who’s leading the way?

Attracting real customers vs headline account opening numbers requires a fully rounded customer proposition and brands with depth.  New digital banks like Monzo and Revolut have achieved spectacular growth with two million or more customers each. They score highly in customer experience feedback as well. However, they remain some distance from profit, and usage levels remain low compared to established banks. On the other hand, in the UK, banking apps from Lloyds, Barclays and NatWest continue to dominate volume usage.

Arguably the UK’s most successful challenger bank is First Direct, which is entering its 30th year of business. It consistently delivers a profit stream to its parent HSBC and equally consistently ranks amongst the leading UK banks for customer satisfaction. For its 1.45 million customers, First Direct represents their primary banking relationship where salaries are paid in and mortgages, rent or utility bills are paid out. That gives the bank riches of customer data and heavy transaction traffic.

The question of a fintech bubble

The buzz of excitement around fintech, changing the face of financial services and raising billions from investors keen to ride the wave, is palpable. However, there are also those warning of hype and the dangers of another tech bubble. There have been high profile failures including Click & Invest, the robo advice service launched, and subsequently closed by Investec. They reportedly wrote off over £30million on the venture. There was also Loot, the digital bank, which despite attracting over 200,000 customers and investment from RBS was forced to close.

Technological advances bring an array of opportunities. However, it’s not a foregone conclusion that they equal success. The same need for insight into how people think and behave when it comes to their relationship with money is still, or perhaps more than ever, of fundamental importance, particularly when it comes to forming or reinforcing purchase habits that endure.

A strategy for success

gigCMO’s Fractional CMO -sometimes referred to as an Interim CMO -   Martin McGovern has more than 30 years’ experience in successful marketing and brand building across banking, investments and insurance. He has worked with industry leaders and through some of the most challenging periods in the financial market’s recent history.

Clearly, there are no guarantees with any business, and as exciting as technology is, it can create as many challenges as it resolves. However, industry knowledge, strategic brand building, marketing and a savvy impartial perspective are all key to providing valuable reality checks and guidance, from product conception through development. That’s where gigCMO can help.