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Pendo: Why Fintechs Need to Take a Product-Led Path to Resilience

Fintech investment plunged 92 per cent in value in late 2022. The sector – previously thriving and enjoying consistently high growth – is now looking highly vulnerable to the economic downturn. With a few notable exceptions, the tables have turned for many of the disruptors that had once challenged traditional banks. As a result, their survival will depend on how successfully they are able to adapt to more frugal business models. 

Trisha Price, chief product officer at Pendo, a product-analytics app, argues that the solution for beleaguered fintechs and challenger banks lies in product-led grow (PLG).

Price is chief product officer at Pendo, where she oversees its product management, design and customer education teams and sets the product strategy for the company. Prior to joining Pendo, she spent more than 20 years as a technology leader in financial services companies including nCino, Primatics Financial and Fannie Mae.

Here, she explains why fintechs need a product-led approach to survive 2023.

Trisha Price, chief product officer at Pendo
Trisha Price, chief product officer at Pendo

Three months into 2023, the global economic outlook is frustratingly uncertain. Corporate budgets and headcount remain frozen or shrinking, growth is sluggish at best, and investors are still taking a cautious approach to the market. The macroeconomic environment has proven difficult for tech companies to navigate—fintech companies in particular.

By the end of last year, fintech investment had plunged a staggering 92 per cent. Developments like the collapse of the tech startup-focused Silicon Valley Bank only add to the uncertainty. An industry of disruptors aiming to challenge traditional banks now faces its own precarious future. Navigating rising interest rates, increased regulatory challenges, and tightening underwriting standards.

As a product and technology leader since 2001, I have experienced firsthand how difficult economic cycles have impacted the financial services industry. During the Great Recession of 2008-09, I was leading a company focused on back-office support for loan accounting and reserving. I saw how the firms that were able to avoid major credit losses while maintaining their customer base and wallet share were the ones that survived.

As we navigate the current downturn, one thing is certain: fintech firms’ survival will depend on how successfully they’re able to continue to grow their user base and cultivate leaner business models.

Traditional banks may not offer the most modern user experiences, but they generally have a lower cost of capital than fintechs. This means the latter has an even bigger hurdle to climb to achieve success as a business. Efficiency is the name of the game. And the path to doing more with less while still wowing customers and delivering wins for the business lies in leveraging your product and perfecting digital experiences.

Invest in product-led growth

Simply put, product-led growth is a model that puts the product at the center of your business. That means investing in the app beyond merely the core functionality and services it provides (which, to be sure, should always be a product pillar).

It means building an app that’s a marketing channel, a sales vehicle, and a feedback and support hub all at once. And it means leveraging the analytics capabilities of your product to get real insights about what’s working and what could be improved.

Onboarding and support

Product-led fintech apps make the user experience as intuitive and seamless as possible. In the PLG model, the product itself is an onboarding tool and support center. In-app walkthroughs help customers familiarise themselves with core features and guide them through performing common transactions.

They also help users navigate new and exciting features–say, a new peer-to-peer payment feature that leverages  blockchain, or an AI tool to help them navigate a loan application process. These automated, targeted guides not only help users get up and running faster, they save the business precious time and IT resources in the form of deflected support calls and tickets.

Freemium models

At the foundation of a PLG sales model is the idea that there’s no better way to sell your product than to let prospects use it themselves. Freemium fintech models give users a limited opportunity to see how your product makes their lives easier in key ways that leave them wanting more. It may cap the number of users or sessions, or offer only select features, for example. Whatever the specifics, fintech companies who do freemium right give users every opportunity to see what makes the product great—and convert to a paid model with ease.

Cross-sell and upsell opportunities

Fintech platforms that embrace product-led growth also communicate new features and products to users when it’s top of mind–ie, when they’re in the app itself–to drive more and better cross-sell and upsell opportunities.

What’s more, they can leverage product analytics to understand how different user segments engage with the product and discern which promotion is most relevant for which segment. The result not only saves marketing budget, it leads to a bigger ROI on promotions due to the rich behavioral insights informing the targeting.

Never stop improving

Product-led fintech companies can leverage the same analytics that give insights about how engagement happens to inform ways to improve the product, prioritise what to build next, and become more efficient in the process.

They can also leverage the same in-app capabilities they do for onboarding and cross-sell promos to send out feedback polls and surveys in smart ways. They may want to target segments of users they consider most likely to engage with a new feature to get initial insights around customer sentiment, for example. Or they may want to poll “superusers” of their app to see which potential features on the product roadmap are the most important to move into production.

But what all these individual actions have in common is that they’re built on relevant, data-driven insights.

How fintech can not just survive, but thrive

For fintech companies, making seemingly small changes to their product can have a big impact on both the user experience and organisational efficiency. It can also ensure that technological innovations in the fintech space translate to real value drivers for both customers and the business. This is an industry at a crossroads, but the path forward is clear. And it starts with optimising their product.


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