Chatting to industry colleagues the other day, we were bemoaning that capital markets have always been a highly cyclical industry and we wondered what it would be like to work in an industry that was more steady state. By way of example, I have had a bottle of Heinz tomato ketchup in every fridge I have ever owned or had use of (and probably a jar of Peanut Butter in the cupboard too) regardless of the economic environment I faced.
Back to our industry and, it is only the hikes in interest rates that have flattered the results of banks and hidden the (in some cases double digit) declines in investment, advisory and trading activity. And so, the next couple of years look tough. The real point, though, is what does this mean if you are a Fintech with a genuinely disruptive product that you are trying to sell into the space?
It was put nicely to me by a good friend when he asked me if I and the firms I represent are selling vitamins or aspirin? What he meant was that If I am selling you vitamins then the onus is on you to believe. You have to believe that somehow whatever pills or lotions I am selling will somehow make your skin clearer, your hair shinier or your smile brighter. But, if you have a headache, you go to the chemist, pay your money, take a pill and, hey presto, your headache goes away - i.e. a clear, measurable cost benefit.
What this means for FinTechs is that it is simply not good enough anymore just to really understand your product, have a super contemporary GUI, AI empowerment or whatever. You have to be able to articulate in hard cash the money your client will make or save by spending some of it with you.
This has three important implications – First, Fintechs will have to do much more solution oriented thinking on behalf of their clients (ideally backed up by empirical evidence or solid case histories). This in turn means really understanding how your clients and prospects work and whether their business objective is to ride out the storm or find a way to profit from the new environment.
