It’s a difficult time for cryptocurrency and fintech companies. The sectors have experienced a period of fairly rapid expansion, but with a growing focus on regulation happening across the globe, it seems that is about to change. The market can only consolidate, which could be damning for smaller businesses, and without a robust growth strategy to bolster them, many will face failure. So, how can you avoid that? If you’re managing a fintech or crypto business, how can you approach growth at a time of instability and consolidation?
What does it take to scale in the crypto and fintech industries today?
There’s been a significant change in the approach to scaling in crypto and fintech in recent years. While once the aim was to grow at any cost, seeking global expansion with a single-minded focus, it was a tactic that frequently ended in failure. In fact, CoinGecko data shows that 60% of cryptocurrencies listed on its website since 2014 have folded. For fintech, the startup failure rate creeps up to 75%. It’s a staggering rate of attrition, highlighting the need for a fresh approach. So, if you want your business to get through the current period of volatility, a more nuance and strategic scaling methodology is called for.
Strategic growth strategies for today’s crypto and fintech brands
Data-driven decision making
However you look at it, if you work in fintech or crypto, data will always be your best asset. You just have to use it properly, and that means data-driven decision-making. It’s the foundation for my own business, where we don’t just track user engagement, but rather we analyse which users actually stay, what encourages that decision, and where potential investors drop off before converting. We ran A/B tests through every stage of our onboarding process to find out how we could make things easier for our users. It was painstaking work, but it ultimately increased our conversion rates by over 600%.
The vital thing to remember is that few people leave a platform because they dislike the product. Problems arise when the user is confused, the process is too slow, or they lose faith in the company, product, or interface. Your data can provide the insights you need to address these issues. And this is particularly important in crypto, where investors often aren’t just joining a new platform – they’re experimenting with something that is entirely new to them.
User experience
This feeds on directly from the previous point. Even though fintech is closer to mainstream finance than crypto, it still presents a new way of doing things. So, when you’re working in an industry presents something new and different, user experience (UX) is integral if you want to gain customer trust and loyalty. A frictionless, intuitive experience is the easiest way to broaden your platform’s appeal because a business can only be as successful as it is accessible. That’s why the best fintech companies today are investing as much in simplicity as they are in features, in opening the door to all comers, and not just those already experienced in the field.
Niche focus
A common mistake in business is to try to cater to all, which usually means that you end up appealing to none. And that’s one of the reasons why so many crypto and fintech startups fail. If your business is going to survive when so many others are folding, your focus has to shift away from trying to attract as many users as possible, and instead trying to attract and retain the right ones. Focusing on a niche group allows you to tailor your services to meet their exact needs, which fosters long-term loyalty. Once you have that core base of loyal customers, then you have the power to expand and move out into other like markets. But you must never lose sight of the needs of your core customer base.
Trust
Trust has been largely absent from the crypto market. Free from regulation and caught up in a web of technical opacity, the industry was known for scams, collapses, and bad actors, which – understandably – deterred many novices from dipping their toes. That can no longer happen if crypto and fintech are seeking to move into the mainstream. And moving into the mainstream is broadly viewed as the primary way for the industries to survive. So, while the lack of sector regulation appealed to many of the original crypto and fintech players, at this point, it’s only the companies that buy into regulation, and prove that they are legitimate, transparent, and built for the benefit of their customers that can hope to survive industry wide consolidation.
With MiCA regulation in the EU looming large, swathes of crypto startups are treating regulation as a burden. But for my company, it has been a welcome development because it provides a gateway to mass adoption. If regulation can rid the sector of bad actors, it’s to the benefit of all legitimate fintech and cryptocurrency businesses. Not least because it’s only the regulated platforms that banks and institutions trust.
Transparency
Hand in hand with trust comes transparency. Consumers and investors are no longer willing to accept promises and hype – they want proof. So, forget about hiding the things that you don’t want your customers to know, and start trying to fix them. Sort out your security and invite third-party audits. And where there are risks involved – and there always are in any form of finance – be open about them and allow your customers to make informed decisions. This isn’t just a case of ethics and good conscience, but of building customer trust and loyalty.
Education
The only way that cryptocurrency is ever going to find its way into the mainstream and attract more investors is to provide open education. Despite the fact that crypto has been a thing since the launch of Bitcoin in 2009, for most people it is still a great unknown. Even for traditional investors with a large portfolio, crypto is something other. And for bankers, fintech is viewed in much the same way, albeit to a lesser extreme. So, if you want your business to thrive, you have to help your customers to understand it. Let them view your product and the wider system through a lens they already understand, and teach them what they need to know.
If you want your crypto or fintech business to survive and grow in what’s set to be a turbulent time, you have to invest in your customers. You have to look beyond the short term and the big, exciting numbers, and invest in security, transparency, and user education. You have to build your customer’s trust, and use every bit of data you have wisely. And you have to be committed to that process for the long haul. Only then will you start securing your position and seeing your business grow.
