The fintech industry has grown immensely in the last few years, making up nearlyhalfof all the venture capital invested in 2018. As a result of that investment and growth, regulations have been increasing, consumers are becoming dependent on fintech technologies and the fintech market, and fintech companies are maturing.
But during this uncertain time, fintech companies must focus not only on establishing their name and securing funding, but also on sustaining their profitably and growth as much as possible.
One key factor that determines company success above everything else is your team.
I’ve found managing a fintech company is especially challenging because it requires two different management styles to address each side of the business: the ‘fin’ side and the ‘tech’ side.
Financial professionals typically use a bureaucratic leadership approach. Focusing on security and consistency is essential when dealing with client finances. A leader with a financial background tends to focus on following procedures, enforcing rules, and producing specific, predicted outcomes.
In a technical setting, however, operations tend to be less structured, with leaders adopting a more laissez-faire approach. On a technical team, everyone knows the end goal, but the process is still undetermined at the beginning of each project.
Technical teams often solve problems as they go, navigating the limitations and possibilities of reaching a goal each step of the way. Technical team leaders often assume that employees have the skills that they need to do their jobs, and so there is generally less supervision and more individual ownership.
As a relatively new industry, the regulations for fintech are continually changing. As a leader, you need a team that can follow existing rules while also adapting quickly as things are changing. Creating and leading a team that will be successful in this ever-shifting environment is crucial for success.
Below are a few challenges fintech leaders frequently face, and my tips for avoiding them.
Making hiring decisions is one of the most difficult processes for any business. Rather than taking on each hiring decision individually, make an overarching plan for hiring.
Your team is the backbone for everything your company does: propelling product development, raising capital, reaching your target market, and more. You should be putting as much thought and strategy into creating a hiring plan for different growth stages as you do other tasks, such as raising capital.
For an early-stage fintech company, the majority of your hiring budget should go towards engineering and product marketing talent because the focus is to build the product and get it out to your customers. One jack-of-all-trades business development person is also essential. This person can help you create a timeline for growth, which should coincide with a hiring plan for each phase.
A common mistake I’ve seen many fintech companies make is to hire an extensive marketing team before they have a product to promote. Instead, always hire for your current business needs, rather than projecting for next steps.
Look for local and remote talent
Like the dual-leadership approaches, hiring needs for fintech companies vary. Often, companies need people with a local understanding of compliance, markets, and partners to ensure success. However, the top engineering talent for technical needs could be located elsewhere.
Don’t be afraid to set up a distributed team and bring together the best fits for each role. A combination of local and distributed talent will help check all the boxes and create a model for scaling and working across borders from the beginning.
Prioritize your team expenses
To be competitive with fintech giants like Stripe or Monzo, many startups feel that they have to offer similar compensation packages or perks. For an early-stage startup, however, these are expenses you probably can’t afford.
Avoid overpromising perks and instead focus on factors that make the day-to-day work experience appealing and satisfying. For example, consider how you can offer your team members a flexible work-life balance.
Establish strict guidelines on intellectual property
Intellectual property is the backbone of any fintech company’s offering and needs to be treated as such. The team developing your technology knows it better than anyone, and they are in a position to take it. Though you hope that good hiring choices decrease this risk, it’s best not to take any chances.
Consulting with a legal professional to create airtight contracts about intellectual property for everyone in the company will help avoid legal problems later, especially when a majority of your team is working from home and possibly on less secure personal devices and networks.
Create a cross-functional understanding
Defining the responsibilities of your employees is necessary to ensure that you are getting the best out of each person and to avoid redundant work. However, letting different departments operate in silos can result in misalignment across the team.
Without cross-functional understanding, you could end up with a marketing strategy that misrepresents your product, or a product that is disconnected from what customers want.
To help everyone get and stay on the same page, organize regular interdepartmental meetings. I also recommend you implement cross-departmental reviews in your workflows to keep things on track.
Foster team unity
As in any early-stage company, fostering connections amongst your employees will make a stronger, more productive team. Feeling a personal connection to colleagues can make your employees happier and healthier, which will translate into their work and help keep everyone motivated and productive during sprints.
Additionally, when individuals feel comfortable with their colleagues, they are more open to asking questions, taking steps to increase cross-functional understanding on their own.
As discussed earlier, many fintech companies have distributed teams, whether organized that way from the beginning or put in place as they grow. To foster team connectedness, suggest activities you can do together and create spaces for non-work conversations.
Showing that you value your employees both in and out of work sets a precedent of care as part of the company culture and can help create a sense of unity.
Managing any team is always demanding, but with these challenges and tips in mind, you can make a plan of attack that will help your fintech business take on challenges and stay strong under any circumstance.
Published July 6, 2020 — 06:30 UTC