A report by payments solution provider Moorwand has detailed that FinTechs who outsource to partners can generate almost £1m in additional revenue.
The report – titled Specialists vs Generalists: How do FinTechs fuel growth? – investigated the reasons why and how FinTech companies outsource to third parties, the importance of outsourcing for the growth of FinTechs and the impact of working with specialists or generalists on FinTech businesses.
The report studied 75 senior decision-makers at FinTech businesses across France, Ireland, Germany, the UK and Lithuania. It also involved contr2ibutions from technology providers and consulting businesses such as Ozone API, W2, Pannovate and Polymath Consulting.
According to the report, FinTechs outsource to build out their capabilities quickly and efficiently as well as expand into new markets and new customer sectors. In addition, user experience is an area that almost half of FinTechs outsource, with 84% seeing this as ‘business critical’.
The research found that the top three reasons FinTech companies outsource are to improve the user experience, accelerate time-to-market and plug gaps in existing capabilities.
In terms of budgets, Moorwand found that almost one fifth – 18% – of total FinTech budgets are committed to outsourcing, while nearly all outsourced services considered business-critical.
Many established FinTechs were identified to outsource more than their younger counterparts – with 67% of established firms outsourcing loyalty and reward programs compared to only 35% of newer FinTechs.
The report found unanimous agreement from its studied decision-makers on the topic of whether compliance is one of the primary benefits of outsourcing. In addition, FinTechs who are more established in the area of compliance-related services are more likely to outsource.
FinTech firms who only use specialists were also found to be more likely to rate their relationship as ‘very good’ – with 86% for specialists and 55% for generalists. This also extends to customers, with FinTechs that use specialists reporting a customer engagement increase – 91% for specialists vs 76% for generalists.
Moorwand CEO Vicki Gladstone said, “For a long time, the fintech sector was characterised by the idea of disruption and competition. As the industry matures, propelled by the arrival of open banking, banking-as-a-service and more recently embedded finance, focus has shifted to collaboration to drive growth.
“The research clearly demonstrates that outsourcing is helping firms to improve the customer experience, expand into new markets and customer segments, and launch new products and services. And it also demonstrates that as a fintech becomes more established, they increasingly work with specialist partners, especially when it comes to compliance.
“Whether the fintech is big or small, in the UK or France, focused on payments or lending, the right choice of outsourcing partner is critical to fuelling growth.”
The report can be downloaded here.
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