Five Ways Fintech Startups Can Find Customers

When founding a company, we all secretly hope that the best product (ours, of course) will win on its own merits. That’s rarely the case—seemingly brilliant apps often languish without finding an audience. As a result, many entrepreneurs become frustrated in the transition from product craft to the drudgery of customer acquisition and marketing. The question (to paraphrase product-market-fit guru Andy Rachleff): Once you’ve created the product, how do you get the dogs to eat the dog food? 

Today, customer acquisition is harder than ever—research suggests that more than half of US smartphone users download zero new apps per month. That means if you’re waiting to develop a distribution strategy until after your product is built, you’re likely already too late. This is even more pronounced in fintech, where customers might already be hesitant to adopt your product. As a startup, you can rarely rely on word of mouth. Here are some often overlooked ways for fintech companies (and beyond!) to find users.   

Get bundled into payroll 

Services like earned wage advances and robo-saving can now be seamlessly integrated into the flow of payroll, thanks to providers like Square and Gusto. Beyond creating a built-in customer base, this model also makes it less risky to extend loans, since default rates are lower when payments are automatically deducted from the borrower’s paycheck. One example of this strategy is Guideline, a startup that distributes low-cost 401(k) plans to small businesses.

Embed with employers

This is a spin on B2B2C: you sell your service to a business, gaining that business’s customers as your own in the process. In this case, however, you’re distributing a product to employees via their employer. Unlike a typical channel strategy, these integrations work best when the product is mutually beneficial for both the employer and employee. For example, in the case of on-demand digital assistant Accolade Health, employers see reduced health care costs from their risk pool, while consumers see improved health outcomes. In fintech, this route has been taken by employer-distributed apps like

Infiltrate existing marketplaces

As dominant online marketplaces are unbundled, they can become large-scale distribution channels in their own right. Alternative home-rental company Sonder, for instance, lists its properties on Airbnb to piggyback off the platform’s massive reach. Once users discover Sonder’s listings, the Airbnb competitor can pursue a direct relationship with those customers. Likewise, Capital One offers cards and loans via Credit Karma, then uses those products to funnel consumers into CreditWise, its competing credit score monitoring app.

Activate social networks

Social networks have been largely underutilized in fintech thus far. But existing social bonds can be a powerful tool used to encourage saving and extend credit—ROSCAs are an age-old (offline) example. Looking ahead, a16z general partner Connie Chan recently wrote about the use of WhatsApp and WeChat groups in China to facilitate product experiences in travel, shopping, fitness, and more. 

Revisit direct mail 

Mail is a time-tested channel that’s often undervalued by startups. But for financial services institutions, mail has a number of advantages in reaching untapped customers. For one, targeting data can be married with credit bureau data, making it easier to pinpoint prime customers. And since the price of sending mail is fixed, it provides a stable, cost effective alternative to Google’s ad auction model. 

Related reading:

Using ‘Inflection Points’ to Overcome Fintech Startup Distribution Challenges

a16z Podcast: The Basics of Growth — User Acquisition

Fintech’s Second Wave: Lenders in Disguise

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