What Defines Success in the Fintech World?

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Maria Szepel

Updated Aug 1, 2023 • 13 min read
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Fintech companies have begun developing on a larger scale after the 2007 financial crisis, which caused a decline in confidence in traditional financial institutions. Since then, the sector has grown to be one of the most competitive industries, thanks to (but not limited to) new technologies that allowed many businesses to gain a competitive advantage:

Blockchain, AI, biometric indication, RPA, big data, new payment methods, infrastructure-based technologies, and others.

Fintechs apply these cutting-edge technologies to improve existing financial services or create new ones. They are particularly innovative and grow most successfully in developing countries in Asia, Africa and Latin America, where the percentage of people who don’t own a bank account exceeds 60%, but where smartphone ownership is prevalent. There in particular, technology made financial services more accessible to the general public.

This attracted heavy venture capital investment to the sector, which significantly contributed to its growth. In 2019, the sector was valued at over USD 5,504 billion! Without a doubt, fintech innovation has transformed the industry and has paved the way that almost every financial service business now follows. At the same time, none of the companies have dominated the sector as the key player, in part due to heavy regulation within the sector.

Thus, the question arises: What to look at when measuring the success of a fintech business? In such a highly competitive industry, looking at the common indicators in finance, customer metrics, internal processes, and growth segments may not be enough. A more holistic view on the fintech industry will include the following seven metrics:

  • Acquisition, including the number of app downloads and new customers,
  • Activation, which indicates the number of people who actually start using your solution,
  • Retention rate, which indicates how many people hold on to and keep on using your product,
  • Number of referrals, or customer recommendations, is one of the best indicators of success you can look at,
  • Daily revenue, and/or the number of transactions,
  • Marketing metrics that best work for the business,
  • Technical metrics, including page load times and database memory use that indicate how smoothly your tool performs.

However, fintech startups should remember that measuring success in the fintech industry isn’t just about looking at the metrics, but also knowing how they interplay. To properly analyze your fintech business, you must be able to map the relationships between your app’s performance, marketing efforts, and business results to obtain meaningful indicators.

Top KPIs to monitor success within fintech organizations

Every fintech business walks a different path, and this is reflected in their approaches to measuring success. To find out how they look at it, we invited experts working for fintech businesses and asked them two questions:

  • If you were to choose the top 3 KPIs to monitor success within your organization, which ones would that be and why?
  • What, in your opinion, is the most common mistake fintech businesses make when it comes to measuring the success of their activities?

Let’s see how some of the leading tech industry players answered and what is their rationale behind those answers.

Fernando Costa-Cabral, Head of Product at N26

Fernando Costa-Cabral quote
I would pick:

  • Subscriptions as a % of customers,
  • Churn,
  • Operating Profit Margin.

The first because neobanks are disrupting the incumbents’ pay-as-you-go hidden-fees model into creating bundled value that customers are willing to pay for. Churn because it measures the sustainability of the business model, since no business can continuously pump funds to grow if customers end-up leaving. And last EBIT, since turning a profit marks the moment when a business no longer needs external funds.

George Panou, Head Of Innovation Center at Eurobank Greece

George Panou - What Defines Success in the Fintech World

I would measure success within a fintech organization by monitoring the following KPIs:

  • Gross Profit Margin Percentage on Sales by Quarter. First of all, while operating a business you need to understand if you are profitable. Generally this is shown at company level annually, but leaders need to take decisions daily in order to grow their company so they have to have this information daily and on the spot.
    Gross profit could show the leader the money left over from revenue after accounting the total COGS without disrupting other operations so he/she can make decisions. With a glimpse of an eye you can see which sales channels are the most profitable, which customers are the most profitable, and which products are the most profitable.
  • New opportunities versus deal close ratio. It is very important for a leader and the company to watch the deal close ratio carefully. Firstly, if the ratio improves then you can see if it’s a result of something you’ve done in your team. Using this metric as a team KPI also pushes the team to work harder to close deals.
    Pushing on increasing the conversion rate and increasing pipeline generation should increase the number of deals you win because of your consistent sales process.
  • Customer satisfaction is also an important KPI. How else will a leader measure the success of the company? Customer satisfaction is very important because it not only measures whether the product itself is good, but also affects the NPS (Net Promoter Score), which is an indicator of how likely a customer is to recommend a product to others; in addition, customer satisfaction affects the customer retention rate. KPIs are very important no matter the order. Peter Drucker said: 'You cannot manage what you cannot measure.'

Helen Björk, Product Manager at Northmill Bank

Helen Bjork quote

The top 3 KPIs to monitor success within your organization are:

  • Making sure that the KPIs are not only set on a management level but also on a product team level. The whole company needs to know where we are heading.
  • Not only monitor success in classic metrics but also get real customer feedback to measure your success.
  • Success is not only hitting your metrics but also how your team is feeling and making sure that they are engaged in their work and the goal is reachable.

Teams need to make sure they also have long-term KPIs to measure the right metrics, not only what will make them grow today.

Patrick Breuer, Head of Mortgage Product at McMakler Finance GmbH

Partick Breuer - What Defines Success in the Fintech World

The revenue growth rate shows how fast you grew within a given time period and also how good your product-market fit is. Another KPI is net customer churn rates. I would monitor if your existing customers/your older customer cohorts stay with you. Your company will fall short on revenue targets if your churn is too high.

However, this KPI only makes sense for some business models (e.g. subscriptions-based). Finally, there’s the end-to-end top-level conversion rate. This helps to identify how well you can turn your leads into sales. It provides you with a good indication of your effectiveness and overall company success.

In my opinion, the most common mistake fintech businesses make when it comes to measuring the success of their activities is that most companies set up too many KPIs in the very beginning and then don't really know where to focus on. Also, some businesses focus on the wrong KPIs.

As outlined in my top 3 KPIs, not every KPI makes sense for all businesses. You should always stick to the KPIs that fit best to your critical company goal. For example, as an early stage company, you should solely focus on your growth rates instead of any micro conversions.

Jasper Martens, CMO at PensionBee

Jasper Martens quote

I think that some fintech companies make a very common mistake when it comes to measuring the success of their activities by focusing only on aggressive growth without thinking about how they could profit from their customers.

Mehmet Burak Dikmen, Head of Growth at insha

Mehmet Burak Dikmen quote

Active customer numbers are important since they affect everything we do. If customers use our app actively, we can offer many other different services to them. We are a growing fintech and the monthly growth rate determines how our future looks for us and our investors. Providing good UX, simplicity, and being cool is not enough to sustain our business, we have to generate sustainable revenue sources and reach profitability.

Fintech companies should differentiate itself since the market is getting more competitive each day. This could be done by finding different niches, developing new products, or providing excellent services.

Ricardo Vidal, Product Executive, Fintech Advisor

Ricardo Vidal - What Defines Success in the Fintech World

In my opinion, we should focus on the following KPIs:

  • NPS (Net Promoter Score) to know how happy your customers are with your product. CSAT (Customer Satisfaction) is an expansion of the NPS across different touch points that can give a very holistic view of satisfaction and affinity.
  • Churn/retention rate to understand how relevant your product is to the users VS being just a one time or dormant relationship.
  • Bonus: If you generate revenue, CLV (Customer Lifetime Value) as it gives a good overview on how a user develops and interacts over time.

I previously focused on customer KPIs because those are often under the shadow. It is common to hear that challenger bank X has 5M customers, as a proud KPI, but in reality, often only around half of those are active on a regular basis. If you only focus on a financial transaction, that may well be a great first-time contact with your product, but it may also well be the last, putting aside any future affinity with the product or the brand.

Vasilis Zoupas, Co-founder & CEO at Woli

Quote of Vasilis Zoupas

In my view, fintech companies should monitor the following KPIs:

  • Daily active users (DAU/MAU) to measure ongoing user engagement with the service.
  • Conversion (%) to paying users to measure the effectiveness of your monetization strategy.
  • Cost per Installation (CPI) to measure the effectiveness of your marketing messages.
  • Customer Satisfaction – measured through various metrics like NPS and Customer Support analytics.

Although fintech startups primarily focus on user growth, it is vital to have KPIs in place which prove the viability of the business model – and this is even more relevant in subscription-based services. If these KPIs make sense, then scaling the business is the natural next step.

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Maria Szepel

Senior Growth Specialist
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