6 principles to Become a Purple Fintech Cow
It all started with Nubank`s recent earnings reported in late August.
The Latin American neobank (basically a Brazilian Fintech for now) is a clear leader on many KPIs and has become profitable.
83.7 million customers (+28% YoY)
$18 billion in deposits (+35% YoY)
$1.9 billion in revenues (+60% YoY)
$224.9 million in profit (first time)
Nubank is now the 4th largest financial institution in Brazil.
Linas Beliunas wrote in his late August newsletter that Nubank is building the Apple of Finance in Latam, despite the fact that expanding beyond Brazil hasn’t been easy for Nubank.
In `my book`, I`ve always compared Revolut and Nubank because they are two opposite extremes in terms of functionalities and number of features. At Finovate Fall in New York, I asked the new beta version of Fintech Insights chatbot (powered by an LLM and trained on their data) to compare the total number of features of the two neobanks (on ios).
Neobank success is largely a function of local market conditions and what I like to think of as the ability to become a Purple Fintech Cow, and not necessarily a function of the number of features.
Fintech by now is seasoned especially in the consumer banking sector and unless it goes back to the whiteboard and re-introduces into its strategy Seth Godin’s “Purple Cow” concept, it will live a mediocre life if any.
The 6 key concepts in Seth Godin’s book “Purple Cow: Transform Your Business by Being Remarkable” that Fintechs need to reflect on are:
- Being Remarkable
- Innovation and Differentiation
- Breaking Through the Clutter
- The Power of Word-of-Mouth
- Overcoming Corporate Conservatism
- Constant Adaptation
Standing out — as a Purple Cow would — is easier said than done.
Don’t be fooled to think that a purple logo will help this cause.
Yes, Nubank has a purple logo but that was not part of its success. I must say, however, that the fact that Starling also has a purple logo and is one of the few neobanks globally that is also profitable, is `Creepy`.
Dear Fintechs, whether you have a purple logo like Nubank, Starling, Atom Bank, World Remit, Truist Financial, or Purple (neobank for people with disabilities), or not; it is time now that frothy valuations are not the norm and funding is tough, to consider the 6 principles of a Fintech Purple Cow.
Time for Fintech to revamp itself for this new phase and become Purple, otherwise it will shrink in size and live a very mediocre life characterized by dull, faded, worn-out colors.
To become Purple in Fintech Land:
1. Innovate or Die:
This used to be the mantra to shake up the incumbents and still is. But ironically, now it applies to you too dear Fintechs.
That was the heart of fintech success. And now to become and hold on to your title of a Purple Fintech Cow, you must continue to innovate.
2. Solve Real Problems:
We are well beyond front-end window dressing and in this macroeconomic environment, Fintech has to come to the rescue of the mushrooming financially vulnerable population and the new economic realities.
If Fintechs withdraw from serving customers and don’t dare to solve the new real problems — mainly credit and retirement-related — then they are accomplices to the increasingly financially excluded population.
3. User-Centric Design:
Fintechs have to lead in redefining customer centricity as GenAI and Web3 are slowly but surely transforming economic activity.
The Attention economy is moving ahead and Fintechs need to mind the gap, otherwise, they will be left behind.
4. Embrace Technology Trends:
Fintech companies have to find ways to leverage the recent advancements in Machine Learning (one of them being GenAI) despite the fact that they are for now, very expensive. They must lead in leveraging Blockchain Tech despite the adoption challenges because of the collaborative nature of the Technology.
Otherwise, they will be leapfrogged by incumbents, BigTech, or the new breed of AI and Web3 companies.
5. Build Trust and Security:
Reality Check. The Trust game has not been won by Fintechs and is at risk of being won by others — from BigTech to Incumbents. Think Apple and JPMorgan.
Don’t fool yourselves, but Transparency and Security, have not been the forte of Fintechs.
6. Disrupt the Status Quo:
Complacency has kicked in as Fintechs have scaled and are competing amongst themselves very often.
The copy/paste mentality within the Fintech sector has negatively impacted the Fintech culture.
A lot of Fintechs have simply joined the Tech Vendor club and now we are yawning when listening to their pitches.
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