The Smarter Startup

Accelerated Momentum in Fintech. Is it Here to Stay?


Colin Kennedy stops by to discuss the Fintech landscape, how accelerated momentum is changing the space, and whether it is here to stay.

If you take a look at any major investment publication, you’ll see that 2020 was a great year for Fintech fundraising. Despite the pandemic, the VC community continues to be excited about all the new innovation in this space.

Colin Kennedy, who just left Stripe and joined Ramp as Chief Business Officer, stopped by Burkland’s Startup Success podcast to discuss the Fintech landscape, how accelerated momentum in Fintech is changing the space, and whether it is here to stay.

2 Things That Set the Best Fintech Startups Apart

Colin has had a wide-ranging career that spans the finance industry — on the banking side, on the operator side, and on the corporate side. Along the way, he’s found two key things at which successful fintech startups excel.

#1 The Founding Team

As cliche as it sounds, when you’ve got a great founding team, a strong foundation for the organization that follows is often the result. A great founding team puts users and customers first, focuses on what really matters, and continuously iterates as it problem-solves.

#2 Long-Term Value and Relationships

Top fintech startups achieve a balance between offering immediate benefits as promised and showing more development and thus more offerings at a rapid pace. With more offerings comes more learnings and, by extension, more customers over time.

Focusing on What Really Matters

“One of the best things about being in Fintech right now is that if you are really able to focus on growing the overall pie for you and your customers, you’re gonna have a much better near-term and long-term relationship versus thinking you need to try to take somebody out of the ecosystem.”
— Colin Kennedy

It’s absolutely integral for a fintech startup to focus on what really matters, especially early on. And a lot of fintechs have failed at this key imperative.

“I think the biggest mistake and what’s always a red flag for me is when companies, especially companies like us, are either talking about valuation or talking about industry disintermediation,” says Colin. “It’s much more of a trophy and a distraction.”

A lot of Fintech startups set out to put a traditional, legacy company out of business, and use that as their north star. Again, that’s not the best place to focus one’s energy.

Instead, build something that people will use in a meaningful way. That means asking yourself questions like:

  • Do you see a high uptick in client usage? Are they using the product more over time?
  • Are your growth rates really strong in relation to growing into different segments?
  • Do you have really strong NPS numbers?

Ultimately, the core mission of a company should be about how to add more value to users, which may at times involve a very partner-centric approach.

Consolidation Within Fintech

“If we can focus and partner effectively with banks, we think it’s a better experience for users.” — Colin Kennedy

Currently, there is a trend of larger companies bolting on Fintechs that are using technology to be more effective at offering a particular product or service than the core franchise can be — this results in consolidation of different services under one umbrella.

Successful Fintechs are focusing on the value they bring to customers through their employees and through their product or service. That involves finding the best people internally in the ecosystem that can improve the value offered to users. If there aren’t internal resources to offer that value, you’ll need to seek out external partners along the way.

Where Acceleration is Happening

“There is a wonderful adoption of CFOs and Heads of Finance, looking at the insights we’re giving on how their company and their employees are spending, and really finding value in the insights.”
— Colin Kennedy

Within the Fintech space, two areas have recently exploded:

  1. Increased focus on bottom line savings – This is due, in large part, to the effects of the pandemic. Fintech solutions with a focus on helping organizations save money, whether that be on travel and expenses or advertising, have been increasingly adopted over the past year.
  2. Increased reliance on insights – CFOs and heads of finance have leaned on Fintechs to offer helpful insights into how their company and their employees are receiving, spending and tracking money, so that they can make more informed decisions for the future.

Closing Thoughts

The last year was a great year for fintech in terms of valuations. But what does that mean for the users of using fintech solutions?

According to Colin, this is the question that should be the focus of fintech startups going forward. How are you making life easier for the small, medium, or large companies to which you cater? And relatedly, how are you building long-term relationships with your users?

As Colin says, “The onus is on us to translate all the Fintech investment into significant action for the future.”

This discussion with Colin Kennedy was taken from our show Startup Success. If you want to hear more episodes like this one, browse all our podcasts.