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Frustrated woman on the phone asking how design and innovation consulting firms pace product development

Legacy finance institutions are facing a transformation. Traditionally, banks and legacy giants have offered a plethora of products and services to address consumer needs—from savings vehicles, investment products, personal lending, and business lending. Now—with the emergence of fintech, the industry faces an unbundling of products and services. New upstarts are moving into the market to address each need in the most consumer-centric way. A few examples—savings (Chime), investing (Robinhood, Covestor), and college debt (Earnest).

The unprecedented fintech 2021 venture funding boom birthed a number of cash-flush fintechs ready to take on a new way of doing financial services. Since then, we’ve seen funding level off (as of Q4 2023), but not before capsizing an already saturated market. At the end of 2022, it was estimated that there were roughly 6,623 venture capital-backed fintech companies worldwide. The saturation of a market is not necessarily bad; it usually signals a thriving and healthy vertical.

But saturation, especially when ignited by an increase of new emerging competitors, technology, and services, can create a sense of dread in the hearts of legacy giants. The reality is that evolving legacy institutions can feel a lot like trying to turn a cargo ship around in a canal—there are no fast movements, only strategic turns.

These slow, careful steps of legacy giants only intensify the feeling of FOMO in a market shifting as fast as the finance industry today. With thousands of well-funded fintechs nipping at your heels and offering your services and products—only faster and more personalized—it’s easy to see why there’s a sense of urgency to evolve. And perhaps rightfully so. Being a legacy brand doesn’t automatically mean you’ve built an impenetrable moat.

So, what now?

At this point, stakeholders often look to two different pivot strategies.

  1. Acquisition—if they’ve done the work to build it, we have the funds to buy it, we can deploy it or take it apart and use the parts.
  2. Build it ourselves—develop, design, and deploy a new product experience from scratch.

Either direction offers pros and cons while requiring a fair amount of strategy and forethought. Neither approach is a surefire way to stay relevant. How’s that for odds?

Here are a few things for stakeholders to keep in mind as they step out to defend their share of the market against young, scrappy upstarts. And for those upstarts looking to take out the Goliaths, these points apply to you, too.

01—Breathe easy. Being first to market shouldn't be the goal.

This shift in focus bodes well for our legacy giants, who often struggle with speed. This old mentality of moving fast to capture fleeting market share inevitably results in a loss of quality, not to mention it’s impossible to keep pushing that speed for long stents, resulting in a lack of scalability. In turn, the lack of scalability results in wasted time and money as you wind up in the exact seat you are sitting in now—trying to figure out how to make lasting market moves successfully.

Nonetheless, we humans love quick and easy. As a species that favors the fast, we discount the process it takes to create something amazing. There seems to be an unrelenting fear that we'll miss out if the process moves too slowly. Or worse, we’ll never make it out of the process—stuck forever in an endless loop of making it perfect.

To be fair, that’s a reasonable thought. But also, that’s not what we’re talking about here. We agree progress should move forward (emphasis on the word move). But, a haphazard jump into the market with the primary priority being speed is short-sighted, at best, and will land you nowhere you want to be. Scary, right?

02—Mind the details. Being the best in the market should be the goal.

Here’s where it gets tricky. In a saturated market, the single most lasting differentiator isn’t flashy, emerging, or even sexy—it’s quality.

We can hear you now, “AI is emerging and lacks quality and is still disrupting many markets.” Yes, we know. But, the AI that delivers the best experience will be the one that takes the majority of the market share, leaving the others behind. Everything that comes before that are test cases, if you will, in the pursuit of delivering the best.

Why? Because there’s something magical about delivering unmatched quality. It’s unmatched. It’s the art of providing the best experience in the best way possible. It sounds obvious, but in action, it can be the most mundane, laborious, detail-oriented trudge of creating the new there ever was.

Real talk? To be the best—there’s one critical step that must happen. Keep reading…

03—Value matters. But value isn't defined by you—it's defined by the consumer.

The finance industry has a history of creating products first and then going back to find the population that needs / wants / uses said product—bypassing the question of the problem to be solved entirely.

The financial industry can no longer afford to launch products without understanding the problem to be solved or the consumer audience they are serving. The world is too dynamic, too diverse, and the individual’s relationship with money is too nuanced to attempt to create a standard "one size fits all product" and slap a legacy brand on it, and call it done.

Being the best in the market requires brands to intimately understand the problem they are solving and craft a solution for that problem. What’s important here is that you aren’t understanding the problem from your perspective as a tenured expert in the industry. Yes, your perspective is important in identifying the gap—but less so in defining the problem.

When you understand the problem from the perspective of your audience—and how they are solving that problem today, you are better equipped to build a solution that delivers true value and naturally differentiates from the saturated market.

It’s worth noting…if you aren’t going to provide value to your audience—your competitor will.

And, your audience doesn’t have to look hard to find your competitor or try hard to move their business over to them.

Tip: when you know the problem you solve, steps 01, 02, and 03 become a lot easier to manage.

04—Change is inevitable. So, build it to evolve.

All good things change. And, change is inevitable—like death and taxes, as they say. As a decision-maker of a legacy finance brand, you’ve likely seen many changes in your years.

Technology is moving fast. There’s no denying the implications on the finance industry are real, acute, and constantly evolving. And there’s no sign of it slowing down.

The only way to ensure scalability in the future is to build the product to scale. This is applicable in both infrastructure and go-to-market strategy. Before you double down in building the product, make sure you take the time to define the end goal. This will help you define the infrastructure needs and potential concessions or hard lines you’ll need to draw when it comes to functionality for a digital product or in-person capabilities for a service.

Truth is, everything gets easier when you build the product to solve the problem. The implementation priorities get clearer when you understand your audience. And ongoing change gets easier when you know what you’re aiming for.