Let's talk about Trust | Fintech Inside - Edition #75 - 29th May, 2023

Hosting the Singapore Fintech Living Room on 15th June! Register and see you there. This edition also discusses the need for trust in fintech startups.

May 29, 2023

Hi Insiders, I’m Osborne, Principal at Emphasis Ventures (EMVC).

Welcome to the 75th edition of Fintech Inside. Fintech Inside is the front page of Fintech in emerging markets.

This is a long time coming, but so glad to finally be hosting the Singapore Fintech Living Room presented by AWS in collaboration with leading fintech folks in SEA. More details in this edition.

This week, we talk about trust. All of us building in financial services are asking our customers to part with their hard earned money. A better or slicker user interface or convenient digital experience doesn't matter if the user doesn't trust the platform.

This edition talks about the need for fintech startups to build and communicate trust. There's also some suggestions but I'd love to hear from you, founders, on measures you take.

Raising funding for your early stage fintech startup? reach out to me at os@em.vc

Enjoy another great week in fintech!

✨ Singapore Fintech Living Room presented by AWS

Super excited to be bringing our community mixers to Singapore on 15th June! We're hosting a meet-up to bring Southeast Asia's fintech ecosystem together.

Join other founders, senior operators and investors at the Fintech Living Room!

Thanks to our sponsors: AWS, Carta, Saison Capital and Aspire.

We are hosting a fireside Q&A (Chatham House Rules) to get candid about the state of fintech today. Space is limited at the venue, so register now!

🤔 One Big Thought

Let's talk about Trust!

Have a look at the ads of Indian banks - right from the big ones e.g. SBI Bank, ICICI Bank and Bandhan Bank, to public sector banks e.g. Bank of India, Union Bank of India and Central Bank of India to the smaller, regional ones e.g. South Indian Bank, TJSB Sahakari Bank. Aside from them running regular product or credit ads, the one thing these banks almost always talk about, repeatedly, is "Trust".

More importantly, you'll also almost always hear the bank CEO's talk about trust. It's like that famous Jeff Bezos video where he talks about customer obsession in virtually every interview.

It's not even that these MD's or CEO's are asking to trust them as individuals, it's about trust in the institution. I doubt even majority of people in financial services know who Mr. Sandeep Bakhshi or Mr. Rajnish Kumar or Mr. Aditya Puri are. It doesn't even matter actually.

All of us building in financial services are asking our customers to part with their hard earned money. A better or slicker user interface or convenient digital experience doesn't matter if the user doesn't trust the platform. Without trust in the fintech "institution", users will still flock to the platform with a terrible experience but one they trust and know will be around. This is why banks continue to rule the roost.

In Edition #36 (05th Sep, 2021), I wrote: To build a great fintech startup one needs 1. License, 2. Trust and 3. Distribution. The Holy Trinity! Fintech startups have largely been able to solve only the third piece of the pie i.e. Distribution, thanks to this slicker user interface and convenient digital experience. License requires capital and the blessing of the regulator - out of the fintech startups' control. Trust, on the other hand, can be built (over time) and is in some ways in the fintech starutps' control to solve for.

Maybe my memory is not serving me well, but I don't think (correct me if I'm wrong) I've seen many fintech startups actively communicate trust in the platform to its users. Fintech startup ads have typically been around cashbacks, rewards or products. All of these are not all bad or wrong - it's important and necessary but the complete absence of "trust" in communications is something I hope changes. I'm intentionally not showing examples of fintech startup ads, because I don't want to pick on companies and I think it's more an ecosystem-wide concern.

Unfortunately for us in tech, trust rarely transfers online as easily as it does offline. Loyalty cannot be built in the absence of trust. We clearly need to solve for trust and therefore loyalty.

I usually give examples of Paytm, CRED and Jar*, as startups focusing on building trust with users. Paytm is among the few that had this "Seal of Trust" on their app splash screen. I've written at length in Edition #22 about CRED doing so many things differently to build trust in the brand and how their business model is so misunderstood. Covered in Edition #54, Jar* is building trust by providing the fastest way to start saving.

The bigger stakeholder in search for "trust in the institution" among fintech startups - regulators. We've done a less than okay job of building trust with the regulators. I think the main reason banks have their way (loosely put) with regulation is because the regulator knows the exact person to reach in a bank (or regulated entity) for compliance queries, for data on customers or for any other reason. With fintech startups - who's to know?

How can fintech startups build trust? I can't claim to know the right answer, in fact I don't, but like every person with a keyboard, I have my suggestions.

Literally use the keyword "trust" in public communications, including those in your app/product. Use the word like you're sprinkling toppings on your ice cream. Use it everywhere, use it consistently. Obviously, don't abuse this suggestion. Help your user build confidence in their trust in you by delivering what you promise or even showcasing data to back up your "trust" claims.
More expensive, but put your brand offline. Slap logos where your customers are concentrated offline, put out a kiosk of your product and give offline demos. Do hard things that don't scale to scale.
If you're just about starting up, be unabashed about borrowing credibility from your partners. RBI itself insists on putting the regulated entity's logos clearly on your platform. Use this and make their logos bigger to steal credibility.
Find ways to directly interface with regulators. They won't bite, I promise. Talk to them about your product, tell them why your method makes sense, tell them how you're innovating, show them data on closed group studies/experiments, ask them what they think, have concrete suggestions on policy (that may have precedent globally) that can be applied uniformly with direct customer benefits.

As an ecosystem, the fintech sector started off a decade or so ago with the pitch of disrupting banks. Fortunately, we've been humbled into building institutions in financial services. It's the journey that counts, not the destination. Building trust is not a destination, it's a journey.

Let's talk about Trust!

There are probably more interventions that help build trust. I'd love to hear from you how you built trust with your users. Share this post on LinkedIn or Twitter and tag me with how you're building trust with your users. Will share all to help other startups learn and grow as an ecosystem.

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🌏 International

Apollo Global Management and Fortress Investment Group are each investing ~$50M in competing groups that aim to restart Celsius under new management. Daylight, an LGBTQ+ neobank, announced that it is shutting down. Tyme Bank, a South African challenger bank, raised $78m. dLocal, a Uruguayan payments company, secured payment service provider licences in Kenya and Rwanda. Georgia's central bank approved the Regulation on Inclusion in Open Banking. Mollie, a European payments company, launched a POS terminal.

🏷️ Other Notable Nuggets

🎵 Song on loop

Fintech updates can get boring, so here's an earworm: Obsessed by Riar Saab and Abhijay Sharma (Youtube / Spotify). Mellow song, great Punjabi rap, good vibes.

👋🏾 That's all Folks

If you’ve made it this far - thanks! As always, you can always reach me at connect@osborne.vc. I’d genuinely appreciate any and all feedback. If you liked what you read, please consider sharing or subscribing.