Of all the many MANY lines written in the wake of the Silicon Valley Bank collapse, Professor Richard Holden’s statement – captured by The Financial Times – has stuck with me the most: “The ‘cool thing’ playbook was good to get money in the door but it is only half the puzzle.”
By pitching itself as a native of the West Coast tech scene, did SVB overlook some of the necessarily stringent behaviours around risk that you’d expect from a traditional bank? And if so, how much of that oversight is due to the need to look ‘cool’.
It raises a question about the often uneasy balance that fintechs have to strike between communicating the very different worlds of innovative tech and traditional finance.
How can fintechs credibly keep a foot in both camps and speak meaningfully to two very different audiences – particularly in the wake of SVB? Only this week did we see another rescue deal completed at short notice – that of Credit Suisse. These events further underline the need for clear, smart and audience-centric comms more than ever before.
We’ve worked with many brands large and small, from Revolut to Ripple, Soldo and Zopa to guide them through this challenge. Here’s what we’ve learnt:
In light of the SVB fallout, markets, investors and end users are on a hair-trigger. While the immediate ‘contagion’ of the collapse was contained by swift thinking from the regulator and even swifter action from HSBC, both tech and finance industries still feel fragile.
While the watchword for fintechs in the last few years has been ‘growth’, there’s a new mantra in town: ‘trust’.
From a communications perspective, fintechs could learn from past trail blazers and benefit from focusing on their core principles and problem-solving capabilities instead of making outlandish or over-baked claims. The ‘move fast and break things’ motto of a young Mark Zuckerburg that set the tone for the thousands of lightspeed tech start-ups that came after just isn’t suited for this uneven environment.
While ‘move slow and build things’ isn’t quite as catchy or cool, the sentiment of communicating stable, conscientious growth and real-world solutions will go a long way to instil trust in your brand and restore trust in the wider sector.
For years, the idea of cosying up to regulators felt at odds with the pacy and proto-anarchic climate of the UK tech scene. However in recent years, and particularly in the two years since the Kalifa Review was first published, fintech brands have wanted enough regulation to engender customer trust, but not so much as to inhibit agility and speed.
As the sector has matured, regulation isn’t the spoilsport that it was once perceived as by certain elements of the fintech space. Between the FCA’s Regulatory Sandbox and the launch of a new Centre for Finance, Innovation and Technology – not to mention positive developments in the UK CBDC space – there’s even more to recommend the idea of having regulation on side. These schemes help to dispel the perception that innovation and regulation are mutually exclusive.
The quick action that the FCA and the government took to find a buyer for SVB and contain the uncertainty is testament to the power of comms and clarity in a crisis (something we wrote about last week). Fintechs should use this moment to keep building those comms channels with regulators, and understand that backing ‘innovation with guardrails’ (aka building something within – not outside – a regulatory environment) is especially powerful in the wake of a crisis.
One area that fintechs have often been lauded for is the ability to provide financial services to people or businesses that might be locked out of traditional banking models, or for building systems that run better and create cost-savings for everyday people. In all of these cases, fintech organisations have something that larger legacy institutions often can’t replicate: a sense of empathy. Fintechs have always been great at understanding the challenges of normal people and businesses, and changing the system to make it fairer and more equitable – these are important, and distinguishing, core principles that fintechs need to hold onto.
While the SVB collapse has recast a light on our approach to risk, it fundamentally hasn’t changed the value of empathy, understanding and awareness as a comms approach for fintechs.
If you are a businesses with a technology that is genuinely bettering financial inclusion, for example, this is the time to lean into those use cases. Communicate how you are fixing real problems, and making the world a better place. More so than ever before, the market is crying out for examples of organisations delivering fintech for good.
While there’s no silver bullet for fintechs looking to thrive in the wake of SVB, a considered approach to communications can build consumer trust and reassure investors. The way to do that effectively must be centred on communicating stability, building regulatory relationships and not forgetting the essential power of empathy. This might not be the end of the era of fast-growth ‘cool’ fintech brands, but for the moment – in the words of Huey Lewis – it’s definitely hip to be square.