Case Study#6: Being a PM in 💸Fintech
🌪 The coming of Fintech
From late 1990s to late 2000s , different parts of the globe saw their ‘e-commerce moment’ and it seemed like everything could be sold over the internet. Then late 2000s also collided with global economic crisis and that is when the first distrust of retail and corporate customers with traditional banking started (even Bitcoin was launched in 2009).
This era marked emergence of new financial services models - mostly technology led. Also 2010-2020 period marked the viral smartphone adoption by populations across the globe and everything (including e-commerce / social media) started becoming mobile first.
Fast-forward to now, fintech is that young new recruit in the office that everyone is excited about. Banks are transitioning to tech-led financial services, fintech startups are burgeoning and many tech companies are looking towards fintech as a way to become profitable or increase revenue streams. A great read : Every company will be a fintech company
Today’s case study doesn’t focus on Fintech industry and its business models. So we will not go too deep into the history.
But I want to deep dive into the role of Product Managers in Fintech industry.
The case is relevant for those planning to get into Fintech Product or already part of it. With this case, I aim to give a real view into what product management in fintech is like - and in process break some perceptions.
Fintech is sexy 😏, but is it really?
Every new technology starts with the promise of being the next cool thing. Product Managers have typically rushed to the next big thing: from e-commerce to Fintech to Web 3 now.
Today, we have multiple fintech companies and there are 1000s of PMs working in those. To understand the key challenges PMs face, I posted a question on my twitter and here are the responses:
Responses:
I joined a mobile payments company, thinking that will be an innovative product, focused to deliver user value, disturb the market. Unfortunately, it is mostly about collaboration between vendors, regulations and other not fun stuff. - Link
“Fintech is heavily regulated and very prone to adversarial attacks and cyber attacks. So many Fintech startups don't prepare special team to deal with regulations and cybersecurity problems.” - Link
The biggest challenge I had was dealing with vendors - making sure their product could actually deliver on the experience we were trying to build. It was like stakeholder management on steroids sometimes. - Link
Government Regulations and the time it takes for the regulator to respond - Link
Domain experts are sometimes too rigid and don't trust technology - Link
There are some clear unique challenges for PMs in fintech that do not exist in other domains:
Unlike other trends and technologies, Fintech is heavy on regulations and bounded by certain processes established by age old regulatory authorities.
Whereas you could build and scale an e-commerce by solving for marketplace network effects and logistics, you cannot build and operate fintech independent of regulatory blessing + backing by a bank or a payment scheme or a payment service provider (and we are not even talking about building the actual product).
Knowledge of fund flows, accounting , treasury, financial services, payment operations is needed (to a certain extent) to actually build and scale the product.
You’re dealing with actual money. And it is extremely personal.
Product-led thinking has historically been applied rarely in financial services. It is difficult, for example, in many parts of the world to convince users to onboard by themselves onto a financial service product. Customers wants some level of human touch to avail a financial service.
⚙️🛠The State of Product Management in Fintech
In 2019, I wrote to Marty Cagan and he shared his thoughts briefly on the quality of product teams in financial services.
And I cannot disagree with Marty. Financial services for long has seen three kind of product managers exist in the industry, and these three kinds are far away from empowered product teams that Marty Cagan often writes about.
1. The P&L Product Manager: A big expectation from P&L Product Managers in financial services is to check the business viability of launching or scaling a fintech product and seldom about checking for customer value.
These PMs typically come into action when a business case is to be built for a new fin-serv product, do market research, create a nice fancy presentation and get approval from the leadership on the business plan. In the entire process, the customer research is either non-existent or taken for granted given the long-standing expectations set by banks.
The interview processes for such roles are characterised by:
1. Focus on domain skills
2. Focus on how well you understand business numbers
3.No design/data/engineering rounds
2. The Project Manager PM: PMs , due to lack of bank’s ability to build in-house tech, end up managing outsourced engineering teams and hence do project management in the grab of doing product management.
They become responsible for giving ALL requirements in one go to outsourced engineering team/company and then be responsible for delivering those requirements by creating a gantt chart. They present to leadership how the progress is going and when is first delivery date of a working product. Of-course everything is mostly WATERFALL.
3. ‘Almost Product Manager’: These PMs have been mandated to run the product by the standards of a product-led company - i.e product driven growth - acquisition, retention and monetisation while making sure designers and engineers are empowered to participate and take decisions on usability of the product and feasibility of building it. These PMs are also required to roll out small meaningful changes over a period of time.
BUT, the reason they are ‘almost’ PMs is because they get stuck between this forward looking product building culture that organisation wants to adapt and ‘stuck in nostalgia’ leadership that wants to build the products the way they always have ( also some bit of Highest Paid Person’s Opinion Syndrome - HIPPO). Such PMs end up being average at doing both.
Also, in general PMs in fintechs have an extremely hard job at hand if they are part of traditional banks or financial institutions where the old infrastructure that can hardly walk, but their job is to make it sprint.
🦾Five Principles for PMs in Fintech to change the way products get built
Not all is grey. Many fintechs have been able to scale fast (Revolut, Klarna and more) while adopting modern product practices of rolling out incrementally, learning quick and also understanding customer needs.
Anish Acharya gives a simple framework (lets call it first principle for PMs to operate in fintech) on how to think of customer problems. Build features that solve three main customer needs:
Emotional: I feel better about an aspect of my financial life.
Cognitive: I better understand an aspect of my financial life.
Functional: I see tangible change in my financial life, such as more money, less expensive debt, or better credit.
Second guiding principle for PMs in Fintech is aim to ‘giving full control to users about their finances’. It is hard to change fundamentally at what interest rate money is lent, for example, but it is meaningful to show transparently how the money will be lend, at what fee, the dates and any fee. Transparency has become the first step to changing financial services, and now many fintechs are changing the fintech experience by removing middlemen and expensive fee (example Wise - Read the Productify Case Study on Wise).
Third principle is to bring user feedback into development process. In fintech, there is an urge to not spend time on UI/UX and just build an interface that allows for users to do tasks such as check investments, apply for loan, check balance. All of these tasks now seem so trivial that hardly anyone spends time on reinventing these interactions. You could start by working with the designer on your team to think from scratch, re-do all tasks and conduct usability tests before development - to create a truly user-centric experience.
Fourth Principle is to acknowledge ‘regulatory scope creep’. You, as a PM, are in fintech which means you’re closest to banks and hence most likely to get bombarded by not-so-cool and boring regulatory, legal or compliance work. Rather than be disappointed by it, plan for it and make it part of your product growth plans. Instead of thinking “ Oh, we have to KYC every customer - this is pain”, think of “If we KYC customers, then we can offer more than one financial services and bring down the cost of KYC, Let’s KYC the hell out of everyone”
Fifth Principle is be data-informed. If you go any traditional or transitioning financial service provider, they would have lot of great business data to show - interest margins, credit losses, cross-selling success and so much more but if you ask them how do you customers perceive the product, they would not have deep-dive surveys. You, as a PM, can change that. Include ‘customer research’ and inputs into the business meetings - create a culture around appreciating customer inputs and building customer empathy.
⚡️How to get into Product Management in Fintech
The previous section was aimed at existing PMs in Fintech and how they can bring change. This section is focused on aspiring Fintech PMs.
Fintechs today need PMs more than ever before as the focus shifts towards digital-first and no human touch financial services products. There are companies looking for PMs with a portfolio of core product skills flavours but also need slightly stronger flavours of:
i) Analytics driven (Interviews could include data case study)
ii) Technical skills driven (Interviews could include system design)
iii) Creative Skills (Interviews could include Build MVP case study)
iv) Well-rounded PM (Data/Design/Engineering rounds)
Besides above, strong people skills are must have as fintech organisations tend to depend a lot of partnerships with banks, PSPs and schemes. Lastly, understanding how a product P&L works doesn’t harm. At the end of the day, fintech products are about managing customer experience but also dealing with real money and its economics at the back.
If you’re an aspiring PM trying to get into Fintech, you have three choices:
1. As an existing PM, interview for fintech companies or fintech units within tech companies
2. As an aspiring PM, start your internship/ first PM role in a financial services company (even could be a bank)
3. Note that fintech is a huge sector. If first, you do not successfully get your dream fintech role - try work in some adjacent roles to enter the organisation - could be program management/project management and then do an internal shift to product.
In the end, persistence counts. Keep applying and most importantly utilise your network or expand it to ‘create your luck’.
🎙Register for the next case study discussion session on “Product Management in Fintech”. Register here . Dates will be announced to those who register.
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Great write up on Fintech PM. You have captured a lot in a simple one pager format.