Banking and finance is a big pond that only gets more crowded with each new startup and challenger.

Legacy institutions are locked in a battle for supremacy with exciting fintech startups challenging the status quo.

And this story is only going one way. Some traditional companies will survive by innovating and moulding to become like the disruptors that threaten them, others will be usurped completely.

But competition is no longer just with traditional banks, lenders and more. Fintech is a billion-dollar industry in and of itself, predicted to grow to $310 billion by 2022.

New startups are now up against the big players in fintech as well as the traditional players in their niche.

In this article we look at 5 things startups need to do to disrupt this industry and make a name for themselves.

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Monzo, Starling Bank and Revolut are just some of the businesses that are quickly becoming established banks in their own right. They don’t have a majority share of the market yet but their influence is being felt (and Starling are making a profit).

With traditional banks adopting many of their pioneering ideas, you’d be forgiven for thinking digital banking is almost an unattainable sector.

But there’s always room for more innovation, even in that area.

And there are plenty of other fintech business models to cover, many of which are still in their infancy. Mortgages, lending, insurance and cryptocurrency are all sectors with user pain points that need tackling.

So how do you make a splash?

First, you’ve got to decide which approach to take.

Successful startups know what they are and own it.

There are two major routes that startups of any kind could take.

A.   Taking a service that already exists and making it fully digital or…

B.   Using technology to solve a problem that isn’t currently being tackled.

The direction you go in depends entirely on who you’re trying to serve.

Neo (or challenger) banks like the ones we mentioned above have found success by taking a real-world banking service and delivering it in an app.

A similar approach has been taken by Mojo. They’re a digital mortgage broker, but they’ve streamlined the process and done away with a lot of the stresses and obstacles that customers normally face when getting a mortgage.

On the other hand, you could create something totally new. Finding a unique pain point and creating a digital solution might be more of a challenge but the competition is reduced and by serving a specific customer you potentially gain more loyalty.

Tembo is one company that is bringing something completely fresh to the market. What are they about?

Target audience: Millennials wanting to get on the housing ladder.

Pain point: Not having access to the money needed to do this.

Tembo’s solution: Helping customers unlock that money through an innovative solution involving family-owned property, without always requiring a gift for the deposit.

There’s not really anything like it out there which makes it all the more exciting and innovative and will hopefully pay off in the long run.

At the early stage of being a startup it’s important to do one or two things really well.

Being distinctive is more than just having a neat idea. You’ve got to make sure you can clearly communicate what you do and then execute it well.

Trying to deliver a number of products or services from the outset is not only costly but is probably going to impact the quality of what you provide.

When Monzo first started out they were just a prepaid card. When they got their banking licence, they offered just the one account.

Over time their list of services grew but initially they just focused on doing one thing well, to get people talking.

Whilst banks usually offer a range of services on top of standard accounts, including loans, mortgages and insurance, choosing to focus on one particular area can make you the go-to specialist.

Today’s average internet savvy consumer can shop around for companies that serve specific needs rather than having their choice dictated by the shops on their local High Street.

If you can convince people that you’re the best at that particular thing, people will come to you. And getting those early adopters is key to long term success.

Adding to your portfolio of services comes later, perhaps after a later round of funding or once you hit a certain amount of turnover, assuming things go well.

This way loyal customers get perks and benefits and your reach expands to a wider audience that have heard of you but didn’t previously have a reason to buy.

Creating a product that is easy to use is surprisingly easy to get wrong.

As a founder it’s possible to get so caught up in the vision behind an app and the solution you’re trying to offer that the user journey itself becomes broken, convoluted or non-user friendly.

A market leading user experience could be what sets you apart.

One complaint people have with traditional banking or financial services is that their user experience (both in person and online) can be confusing, not to mention boring and uninspiring.

One reason why digital banks have been so popular and why traditional banks have been forced to enter the digital space, is because their apps are not only simple but also fun to use.

If this is an area your company is struggling with, getting a design agency on board might be the answer.

It’s nothing new. Treat your customers right and they will stick around.

A commitment to customer connection is one way to be remembered and easier to do at the start but harder to maintain as you grow. This was certainly the case for Monzo.

In a recent interview, co-founder Tom Blomfield noted that their customer service had reduced in quality as they had grown and the cost per customer showed no sign of decreasing. It presents an interesting challenge to other startups to see if they can find a solution to this problem and do any better.

One way of connecting with customers is providing a personalised user experience. The insurance industry has recognised this as one of a number of areas that need to improve if traditional companies are going to survive.

What does this personalisation look like in fintech?

It could be the ability to split up your money and incorporate personalised budgeting into your banking, manually or smartly automated. Or it could be superficial design customisation that simply makes the app more appealing to return to.

Really there are limitless possibilities when it comes to how a brand chooses to connect with its users. If you can find a way to incentivise them to share that brand on social media, as Spotify famously do with their Wrapped campaign, even better.

Often the best marketing is simply making a good product that people enjoy using.

Give your audience a reason to share like Spotify do with their annual Wrapped campaign.

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The Open Banking directive and PSD2 have, as the name suggests, opened up banking data to the wider internet and paved the way for cross company integration.

Connecting with the larger internet ecosystem is a simple way of providing a better product or service and may even help you access a pre-existing user base.

Many productivity apps already do this, whether allowing you to migrate data from other programs or connect with complimentary services like calendar or email to streamline your daily processes.

There are established ways banking apps can do this too, such as connecting with business accounting software, but there are undoubtedly other avenues yet to be explored.

Fintech companies partnering with other innovators and startups, as Stripe have done with platforms like Shopify, can help to grow those businesses and can even put the smaller company on the map.

The question to ask is, can your product or service answer a specific need of a larger company? This could even be white-labelled product you create.

Arguably, this collaboration across sectors and niches is the future of digital company growth.

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Personal finance and banking is a competitive and booming market, but there are always more opportunities to be had.

That might be in property, currency, business transactions or something else.

Or, there’s something that’s already out there that could be done better…

Whatever the next big thing is, we’re certain good design will play a key role in it. That’s where we come in.

Attractive and easy to navigate UX design is a major distinguishing feature when compared with traditional companies and can often have an impact on whether that app or website succeeds.

Having a well-designed product is not an afterthought to help you stand out, it’s an essential starting point.

Our fintech design agency can help with that. Get in touch today if that’s what you need!