Track It or Lose It: Why Fintech Businesses Need A Robust Financial Strategy
Welcome! If you’re here, chances are you’re an experienced professional looking to distinguish yourself in a crowded market. Alternatively, you might be eager to elevate your business’s growth and revenue.
Have you ever wondered why fintechs thrive with robust financial strategies? This episode explores why robust financial solutions are invaluable for growth and success. A good financial strategy helps fintechs make informed decisions about their finances, capital allocation, and overall financial plan. Studies have shown that the demand for fractional CFOs has surged, with a +103% increase in the hiring of interim CFOs since 2023, reassuring the crucial role and growing demand for these professionals.
In a rapidly growing and developing sector like Fintech, strategic solutions are required to stay abreast and compete effectively to navigate the environment with expert guidance. Essentially, fintechs can maximise the expertise of experienced finance professionals offering cost-effective solutions and fractional CFO offerings to strategically develop tailored solutions, identify growth opportunities, optimise operational efficiency, and enhance customer experience through innovative strategies.
The importance of fintech companies seeking consultancy and strategic services cannot be overstated, especially given the rapidly evolving dynamics of the industry. These services are essential for navigating complex regulatory environments, managing financial risks, and ensuring sustainable growth. Hence, the million-dollar question arises of why Fintechs and SMEs should seek out expert professionals for their financial needs. In exploring the need for robust financial strategies, it becomes essential to look at the importance of this and examine real-world case studies that illustrate the remarkable financial growth of notable Fintech players.
Importance of Financial Expertise Services to Fintech Companies
Innovation– Financial experts assist fintechs in allocating capital effectively to fund innovation, by assessing financial resources, identifying funding sources (e.g., internal funds, investors, grants), and developing financial models to evaluate the potential return on investment (ROI) of innovative projects. Innovation enables fintech firms to respond to changing market conditions, meet customer expectations, and achieve superior performance in an increasingly competitive business environment.
Mergers & Acquisitions– Financial Experts play a critical role in facilitating mergers and acquisitions (M&A) for fintechs by providing expertise, guidance, and strategic support throughout the entire process. By strategically utilising M&A, SMEs, and fintechs can position themselves for access to new markets and innovative strategies, enabling geographical expansion and diversification of their market presence.
Wise PLC partnered with fund management giant BlackRock as part of its expansion plans through a merger. Using the Wise Business, banking clients can invest in BlackRock funds. Wise levies two charges, one a 0.15% per annum management fee on behalf of BlackRock, and its service charge of 0.55% per annum thereby increasing revenue using this stream. Block Inc. acquired Afterpay and the acquisition helped Block to deliver compelling financial products and services that expand access to more consumers and help drive incremental revenue.
Benefits of Strategic Consulting Services
Revenue Growth: A key impact of strategic consulting services is assisting fintechs in mapping out diverse revenue streams, measuring their success, and improving their customer experience through innovative strategies. Fintechs can essentially seek profitability strategies from Fractional CFOs like identifying growth opportunities, setting financial targets, and creating actionable plans to achieve them.
Kemish Kinglsey, the CFO of Wise Plc, steered the company to experience an increase in customer growth, account adoption, and higher interest rates and this drove underlying revenue up +24% YoY to £ 1.1 billion in 2023. Through the use of Block Inc. products and various revenue streams, their annual revenue increased to $ 21.915 billion, a +25.01% in 2023 an increase from the previous year.
With its new features and services in 2023, Wise Plc outperforms in revenue comparison with Block Inc. with its expansion of the Wise Assets Interest and Stocks products to be operational in 11 European markets. Additionally, Wise Plc completed the integration into Australia’s domestic payment system and was also granted a Type 1 Fund Transfer Service Provider license in Japan.
Customer Growth: Consulting solutions assist in refining the company’s value proposition by aligning financial strategies with customer needs and market demands. Undoubtedly, having a clear and compelling value proposition attracts new customers and retains existing ones by demonstrating the firm’s ability to meet their financial expectations. As a result of innovative products and services rendered by Wise Plc, their active customers grew +29% YoY to 7.9 million in Q4 ’24, with the number of personal customers increasing +30% YoY to 7.5 million, and business customers increasing +16% YoY to 395 thousand. Cash App, a product of Block Inc., also experienced a significant increase in its user base and transaction volume. The most widely used product, Cash App, had 56 million monthly active users in 2023 compared to 51 million monthly active users in 2022.
Budget and Forecast: Fintech strategists play a crucial role in developing budgets and forecasts for companies, providing mastery insights and guidance that contribute to effective cost control, financial planning, and decision-making. Hence, fintechs can leverage Fractional CFO expertise in cash flow management, risk management, and accurate financial reporting forecasts and projections.
To conclude, financial analysis professionals are indispensable to fintech companies. From achieving current goals to driving the firm to greater heights, the role of strategic consultancy is important for accelerating the success of fintechs. With our in-depth industry knowledge and innovative approach at @Migasuto, we collaborate closely with fintech and SMEs to develop customised strategies that drive growth, enhance competitiveness, and maximise success in the dynamic fintech landscape.
At @Migasuto, we offer top-notch strategic consulting services for fintech businesses and professionals. Through our Fractional CFO services, SMEs can tap into the expertise of skilled financial professionals without hiring a full-time CFO, potentially saving them the huge financial burden of hiring a full-time CFO. Our Fractional CFO services include strategic financial planning, comprehensive financial reporting and analysis, cash flow management, and risk management.
Leverage the revolutionary potential of strategic fintech consulting services to advance your company and career to previously unheard-of heights of achievement. Are you a fintech business leader looking to utilise the services of a forward-thinking finance team? Kindly reach out to us at info@migasuto.com for our financial advisory and brand equity services.
References:
- Wise Plc Annual Reports (2024)
- Block Inc. Annual Reports (2024)
- Brown Miller Management (2024) – Why you need a Financial adviser through the stages of business growth.
- SmartAsset (2023) – What are the benefits of working with a Financial Adviser?
- The Economic Times (2022) – The long-term benefits of having a Financial Adviser.
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