Overcoming customer acquisition cost challenges in fintech

Overcoming customer acquisition cost challenges in the financial technology (fintech) sector has never been more difficult. In the B2C segment, firms are faced with an unprecedented combination of opportunities and challenges. On the one hand, these firms are perfectly placed to meet customer needs currently left unaddressed by traditional wealth management companies, helping people manage their money through increasingly sophisticated apps and technologies. From Robo advisors and stock-trading apps to crowdfunding platforms and portfolio management solutions, technology is quickly augmenting the number of ways in which customers can manage their money.

Star company has recently published the article ‘How to slash customer acquisition cost in wealth management’ where industry experts discuss why client acquisition is so expensive and how tech can help lower the costs. According to the researches, the average cost of a new customer is $3,119. With increasing competition and sky-high customers expectations, that’s just not good enough.

On the other hand, however, the fintech market is quickly filling up, with an increasing number of companies offering attractive deals to onboard new customers and push out competitors. What’s more, many customers are hesitant to invest in financial products that they deem to be overly complex. This is particularly true for older customers who may rely heavily on traditional banking and financial firms to handle their money. The job for up-and-coming fintech companies, therefore, is to convince these customers that fintech can positively improve the ways in which they can manage wealth and make smart investments for the future.

Unfortunately, client acquisition costs currently represent one of the biggest challenges to fintech companies at the moment. Ultimately, companies need to fine-tune their growth strategy in a way that takes into account how long it takes to get their products to market, how to improve existing products, when to launch new products and how to market such offerings to customers. All of these aspects of development can be expensive, making customer acquisition costs once of the biggest challenges in wealth management to date. In this article, we’ve put together a few of the ways in which this challenge may be overcome by finetuning your marketing and development strategy as well as your ability to meet customer needs.

Consider your marketing strategy carefully

Marketing fintech is very complex as it entails communicating complex information in a digestible way whilst convincing customers that your products are the best on the market. It is all too easy to throw too much money at a flashy marketing strategy and end up reducing your all-important innovation and development budget. Fortunately, there are a number of affordable ways to market a new fintech product or service whilst working towards a tight budget. These include:

• Your website: Make sure that your company website is optimized for search engines and is full of original, digestible content.
• Social media marketing: Drive traffic through platforms such as Twitter, LinkedIn, Instagram, and Facebook.
• Search engine advertising: Paid ads on sites such as Yahoo, Google, Bing and Facebook will help you to capture interested customers based on their online searches. With a pay-per-click model, you will only need to pay when a user clicks on your ad.
• Content marketing: Well-written articles are becoming an increasingly valuable resource for drawing organic traffic to your website and can cost very little money. In the wealth management industry, it is imperative that you come up with content that offers useful takeaways for customers about how to handle their money and the value in using fintech.
• Press releases: If you have developed an innovative new fintech product that the world needs to know about, make sure to write a press release about it as soon as possible. If a major publication picks up your story, new customers should start rolling in.
• App marketing: If you have a mobile app as part of your offering, you will need to optimize it so that it ranks higher in app stores and is more visible to customers who may not have heard of your brand before. One of the best ways to achieve this is by investing in paid promotions in Google Play or the Apple App Store.

Once your marketing strategy has been up and running for a couple of months, it is imperative that you analyze its success using a data analysis tool and fine-tune your strategy accordingly. If your pay-per-click ads are not returning the kinds of results you were hoping for, do not hesitate to ditch this channel and focus your efforts elsewhere. With customer acquisition costs in fintech at an all-time high, you cannot afford to throw money away.

Focus on innovation

To drive your fintech customer acquisition cost down, you will need to demonstrate that you are one of the best players on the market as a result of your flair for innovation and willingness to keep up with digital transformation trends. This means acting on the following developments to help your products stand out:

Artificial intelligence

Artificial intelligence (AI) has the double advantage of being easy for customers to use while being relatively easy to integrate into new products and services. Within the fintech industry, AI is typically used for customer service purposes in the form of robots or chatbots. It may also be used for mobile banking in a way that allows customers to handle their money at all hours of the day whilst providing enhanced security and voice recognition features.

Big data

Financial advisors are under increasing pressure to get to grips with big data, and for good reason. The sheer amount of data generated by the financial services industry is vast, including credit scores, credit card transactions, micro-investment information, and many other kinds of information that are vital for financial planning. Putting this kind of data to use in a streamlined way, generating actionable insights quickly and efficiently, is now vital if you want to maintain a competitive business model in the fintech industry. Developing programs that process this data effectively will help you to do things such as learn more about customer spending habits, manage fraud risks, and optimize marketing within a very short space of time.

Robotic process automation

Robotic process automation (RPA) is a way to save on operational costs and minimize any service errors. RPA involves programming software in a way that mobilizes virtual assistants to complete complex, laborious tasks without any intervention from humans. Microinsurance companies, for example, can leverage such technology as RPA can process claims quickly to deal with urgent problems. What’s more, the adoption of this technology can help ensure that your company is compliant with all the relevant rules and regulations – a very important consideration in such a highly regulated industry.

As we have begun to demonstrate in this article, the fintech landscape is a difficult one to navigate and requires companies to balance their outgoings very carefully between marketing strategies and development opportunities, staying ahead of the technology curve at all times. To keep client acquisition costs low, you will need to strike the perfect balance between these forces.