The Fintech market is maturing.
Early entrants to the market–like Stripe, Chime, and Plaid–scooped up the low-hanging fruit of Fintech. They built universal tools, connecting large platforms at scale. Their tools were needed everywhere. And their businesses grew tremendously as a result.
Wide-sweeping opportunities are gone. But there’s still room for companies to burst onto the scene and make a name for themselves. They just need a new playbook.
One powered by a focus affinity groups.
What is an affinity-focused Fintech?
In the early days of Fintech, power players offered up B2B universal solutions. Tools that could help a huge swath of companies be more successful.
As a result, early entrants had a wider client profile. They could target more people and find traction with their offerings.
They didn’t have to be so affinity-focused.
As the market matures, though, opportunities become more niche. And that’s where affinity steps in. An affinity-focused Fintech is a company that’s narrowed its client profile to serve a specific sector of the overall market.
A company that has zeroed in: Copper.
Copper recognized building better financial habits starts at home. So they created a financial services platform for the whole family. But they didn’t specifically target the whole family. They concentrated on the pain points parents have when it comes to the relationship between their children and money.
Copper’s commitment to “make money easy” began with a focus on financial literacy. Not just for adults, but for teens and kids, too.
With financial literacy as the foundation, Copper could provide solutions for multiple issues across a single household. All while promising, and delivering on, a secure platform safe enough for kids to use on their own but still monitored by adults.
So when those kids were old enough, they would continue using Copper as adults, and, eventually with their own children.
Similarly, EarlyBird spoke directly to parents by offering a way to invest for their children. But they went a step further by turning investing into moments with a photo sharing feature, adding a very human element to a space that’s historically described by fierce animals (bull and bear). Their community approach also allows for friends and family to contribute to investments.
Niche Fintechs like Copper and EarlyBird are leading the affinity movement by solving their core audiences’ biggest issues. Each customer segment has different needs, and these brands know how to narrow their focus to serve them.
How can you build an affinity focus?
For new Fintechs serving a niche population, affinity focus is key. And we can discover some great examples of client-building by looking at these emerging players.
First, the community is powerful. Many Fintechs have gone to great lengths to create community engagement and safe spaces for their customers to interact. This includes chat boards, community events, and more.
Enter Neon Money Club. It’s “not an app. [It’s] a place to be. This is the only spot where you can put your money to work without having to learn bank language from the 1920’s or crypto vocab that isn’t written for everyday humans.” It’s a real club.
Neon Money Club speaks their audience’s language, letting them know “[they] belong here.” The company provides a starting point for investing with any amount of money, whoever you are, without the typical prerequisites of a finance background or foundation.
Second, representation matters. Historically underserved markets often feel ignored or skeptical of new services targeted towards them. They’re looking for a “for us, by us” solution that speaks directly to their experience.
Fintechs that come from the population they serve have a powerful story of understanding and compassion to share. They can use this story to better connect with the communities they’re working to reach.
Sigo Seguros did exactly that. In an industry where Spanish-speakers have traditionally been taxed with hidden fees and expensive options, this Insurtech startup was founded with the mission to bring transparent, affordable, and accessible auto insurance to the underserved LatinX community.
Founded by members of the Latino market, the company launched in Texas with a mobile-first, Spanish-speaking solution. With Spanish speakers making up 53% of the Texas population, the founders saw an opportunity to build a platform specifically for them. Sigo Seguros solves a problem from the inside, breaking down historic barriers along the way.
By embedding themselves directly into the consumer population, Fintechs like Neon Money Club and Sigo Seguros are well-positioned to identify the needs of their clients and meet them.
Do you know your community inside-and-out?
As you build your Fintech, ask the question. What does affinity look like for you?
Within this maturing market, it’s more important than ever to stand out to a niche client population. To develop a strong position that goes beyond product offering or features.
You need connection. A true bond that will drive impactful behavior. And affinity is the tool that can help you bridge the gap between your offering and your audience.
Don’t overlook it.
Bringing It All Together
At Fiat, we spend a lot of time thinking about social finance. Deploying financial solutions to meet consumers where they are and ensuring everyone has access to the right tools. This drives us to invest in companies that share our mission, vision, and values.
You’ve heard it before. And we’ll say it again: We invest in companies that are making a difference in the lives of the customers and users they serve. Which is why we support affinity-focused Fintechs that bring together elements of both good business and social finance.
If you want to become more affinity-focused and don’t know where to start, contact our sister company Fiat Growth to learn more.
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