The term “FinTech” describes businesses and companies that combine financial services with modern innovative technologies as their primary service model (Dorfleitner et al., 2017, p.5). FinTech companies aim to automate the financial service sector, providing more efficient, transparent, and friendly user-centred services than traditional bank offerings, presenting a competitive landscape for the banking sector (Dorfleitner et al., 2017, p.5; Romānova and Kudinska, 2016, p.22). FinTechs face surmounting pressure to comply with strict regulatory measures to protect service consumers, similar to traditional banks. However, the difference in capabilities, through financial resources and human capital, make the ability to keep up with these sometimes-changing requirements quite challenging (Lee and Shin, 2018, p.44). It is an expensive affair to make changes to FinTech startup’s’ service model, especially if the venture belongs to a single individual. Nonetheless, the primary challenge is perhaps customer management, which is key to start-up growth. FinTech business competition to acquire and retain customers is quite high, especially given the concerns regarding privacy and security, or the ability to provide services at par with traditional banks. 


                                                        Proposed Solution

Most FinTech companies follow a market development strategy for customer acquisition, a common strategy for most Silicon Valley tech giants. However, such an approach can be significantly costly, especially when competing against other start-ups and incumbents. According to Lee and Shin (2018, p.44), FinTech companies need to understand their market niche and then optimise their service provision model in that niche. It proposes a strategy for product development, which introduces new products and services to an existing market (Loredana, 2017, p.144). It should involve critical innovation strategies to develop products or services to integrate into their business models, with the goal being to increase FinTech service usage, uptake, and increase earnings from the target market, which is a source of competitive advantage. Product development seeks to help the company adapt to market changes, technologies, and competition types (Abdullah, 2019, p.37).

FinTechs can leverage this product development strategy by honing down on three key approaches. The first is motivating increased usage of existing products by improving user experience. It can be through feature enhancement in its technologies, making it more attractive to enhance in-depth and frequent use of its products and services. User experience is a key area of leverage for FinTech companies, as they provide convenience and efficiency that traditional banks may not provide users (Varga, 2017, p.29). However, it must be noted that a human element in financial service provision is a crucial aspect that most consumers consider when deciding whether to adopt FinTech services (Lee and Shin, 2018, p.44). Regardless, the internet and development of mobile technology have made it possible to provide users with convenient and ready access through smartphones, tablets, laptops, and even smartwatches in some cases. With digital mobile devices, customers can access financial services at convenience, doing away with queuing for services like credit transfers or open accounts. FinTechs can leverage these capabilities to improve user experience, attracting consumers to use their services, while noting various other regulatory and compliance requirements of customer service (Varga, 2017, p.29). In any case, infrequent use of a product can be costly to a business that has already invested time and resources into acquiring the consumer in the first place.

The second is to find ways to broaden the product and service portfolio offered to the existing market, by specialising to meet the customers’ specific needs. It requires significant knowledge development, with the business studying customer-specific needs to craft its products and services as solutions to address these needs. Lee and Shin (2018, p.44) argue that providing more personalised service to many people is critical for customer acquisition and retention. An example they provide is Robo-advisor, whose design is to provide more personalised 24/7 service to consumers. Doing so enhances the business’s potential to achieve customer satisfaction, retention, and loyalty in the end. Being adaptive and flexible to technological change is a vital component of technological business in the information era. It enhances the business’s ability to respond to changing consumer preferences and providing higher appeal to a more tech-savvy population whose technological use and requirements can serve as a competitive advantage point for FinTechs. 

FinTech companies should develop and enhance their terms of service to keep consumers engaged. It involves developing pathways towards consumer retention, as it provides a means through which consumers can co-create value. Co-creation occurs when customers can personalise their experience using the company’s products or services while doing some tasks for the company, which can occur through word-of-mouth marketing or feedback mechanisms (Piligrimiene et al., 2015, p.453). It is an essential strategy, especially for customers seeking to transform their financial behaviours. When FinTechs enhance how they approach financial issues faced by consumers like credit scores, borrowing, lending, and repayment, they may increase their chances of growth and competitiveness. The reason is that the FinTech may attract individuals interested in the specific terms provided, who may then influence their social spheres of influence, creating a chain of interactions that help companies to grow in the long-run.

Given the above conditions, it is evident that value is more vital than developing markets for existing products and services. FinTechs can enhance their markets by providing utility and tailored financial services to consumers. However, there are risks to this focused strategy. The first is the potential returns from all the innovation going into product and service development. While product development scenarios may benefit customer engagement, acquisition, and retention, there is no guarantee that the strategy is sustainable, given the rising competition from rising start-ups overcoming incumbent digital firms. An example is the company Zoom, which acquired significant traction during the COVID-19 pandemic lockdown. It is an example of how quickly consumer tastes and preferences change relative to technological advancement, determined by the service quality provided. It requires that FinTechs be privy to market changes, and make significant changes or improvements to remain relevant, which can incur significant cost to the business model. 

Within that retrospect is the competition from banks to provide similar services, with research into how they can integrate FinTech models into traditional banking. It will serve as a deterrent growth factor because many individuals may not see any utility in switching to FinTechs if their traditional institutions provide similar digital currency services. Banks may have significant leverage as they have a ready backup should disruption to digital operations occur. They can switch to the traditional mode of operation and ensure continuity and service provision – an aspect that can be burdening to FinTech start-ups. Nonetheless, these traditional institutions acknowledge the increasing importance of digital currencies, meaning that it is an asset that, if well cultivated, can provide long-term gains for business and better services for consumers.  


Abdullah, N.H.N., 2019. Gaining competitive advantage through new product development capability in Malaysian Government Linked Companies. Indonesian Journal of Economics, Social, and Humanities1(1), pp.37-49.

Dorfleitner, G., Hornuf, L., Schmitt, M. and Weber, M., 2017. Definition of FinTech and description of the FinTech industry. In FinTech in Germany (pp. 5-10). Springer, Cham.

Lee, I. and Shin, Y.J., 2018. Fintech: Ecosystem, business models, investment decisions, and challenges. Business Horizons61(1), pp.35-46.

Loredana, E.M., 2017. The use of Ansoff matrix in the field of business. Annals-Economy Series2, pp.141-149.

Piligrimiene, Z., Dovaliene, A. and Virvilaite, R., 2015. Consumer engagement in value co-creation: What kind of value it creates for company?. Engineering Economics26(4), pp.452-460.

Romānova, I. and Kudinska, M., 2016. Banking and Fintech: a challenge or opportunity?. In Contemporary issues in finance: Current challenges from across Europe. Emerald Group Publishing Limited.

Varga, D., 2017. Fintech, the new era of financial services. Vezetéstudomįny-Budapest Management Review48(11), pp.22-32.