Partnering FinTech platforms for success. Interview with Pablo Montes KPMG’s Strategy FinTech Lead

What’s your role at KPMG?

I am the Strategy FinTech Lead in KPMG Ireland and a member of KPMG’s Global Strategy Group and KPMG’s Global Fintech Network. As part of my role in KPMG, I work with FinTech start-ups and scale-ups to help them accelerate their growth journey. I provide support in areas such as product-market fit and go-to-market planning. I also work closely with FS and non-FS institutions to help them identify FinTech opportunities that are relevant to their business.

What problems do you see FinTechs needing to tackle through their growth journey?

FinTech players operate in a highly competitive and dynamic marketplace. Most of them are pursuing aggressive growth strategies in response to structural shifts caused by new technologies, changing regulations and evolving customer needs. However, achieving and maintaining growth is extremely difficult.

At the macro level the FinTech opportunity is appealing and clear, but the reality is there are multiple FinTech vendors tackling the same issue, making it difficult for their target audience to initially differentiate vendors beyond the team behind the platform.

In addition, the fact that FinTechs operate in such a competitive and regulated environment presents both opportunities and difficulties when it comes to scaling their solutions. Most FinTech solutions are complex in nature; the sales process involves multiple stakeholders and formidable competition, and as a result, FinTech platforms experience long sales cycles that can run for months. This makes it difficult for early-stage FinTechs to secure their first sales, which are so critical to be able to demonstrate traction in the market to investors and progress beyond early rounds of capital funding.

I think for early-stage FinTechs, in particular, it is critical that they seek from the outset to identify how their product meets the needs of their target customers. Conducting product-market fit is also essential to speed up the customer acquisition process and, at the same time, a difficult and time-consuming thing to do in a B2B environment. This is where it is crucial to ensure they find the right partners from the outset.

Otherwise, the company risks diluting the product by engaging in endless partnership negotiations in which they are asked to offer and develop product functionality that their solution cannot or should not offer. The key to achieving product-market fit is building the product or the service on an existing user problem. Too often, we see solutions that do not address any problem or ones that are hard to differentiate from the competition.

For many players, the ideal target group will be relatively small but will require deep research and a clear understanding of their niche and the specific needs of their potential customers. A scattergun approach is unlikely to be suitable since only a few FinTech products are capable of servicing entire jurisdictions or demographic segments. Successful products are more likely to target specific, well-understood customer niches, which will necessarily limit the number of viable target companies available.

As FinTechs scale up, it is crucial to determine how the company is positioned to increase market penetration and form strategic alliances with local players. Fast growth requires companies to understand the size of the opportunity across relevant markets and the individual nuances relevant to their target audience – a challenging task without external support.

Product-market fit is generally not intuited but arrived at through empirical feedback loops. Once found, its durability cannot be assumed – as customer needs change, so must those products that wish to serve them.  At the same time, not all customer needs are powerful enough to sustain a profitable mass market, so it is important to understand not only how deeply the customer’s identified need runs but how broadly it applies across the market.

What do you think FinTechs can do to overcome these challenges?

I believe partnerships can be crucial to achieving business outcomes of the highest calibre as quickly as possible. The laws of comparative advantage may be old, but they are no less true for FinTechs than for any other sector actors. Bringing to market a profitable and scalable FinTech product is a highly complex process for which most brands and startups alike will require external support beyond their core competencies and experience.

Partnership is therefore, likely to prove the easiest route to value creation for many players; overlooking such support, on the other hand, is likely to result in inefficiencies, suboptimal product development, and missed growth opportunities.

So, I think working with a trusted brand that knows your target audience and can connect you to the wider business network is one of the most desired outcomes for a FinTech platform.

What is the best way for people to find out more about KPMG’s FinTech Strategy services? 

Our FinTech strategy team is always available to discuss your needs and find the best solution for you. For more on our FinTech services, please contact us. We’d be delighted to hear from you.

Web: www.kpmg.ie/strategy