A matter of need over want: 5 questions on fintech marketing in 2023 with Fiat Ventures founder Drew Glover

Drew Glover is a founding partner of Fiat Ventures, a VC firm focused on growth for early-stage fintechs. Glover also leads Fiat Growth, the company’s marketing consultancy arm, which helps companies navigate their efforts to scale.

In this Q&A, Glover dives into the nitty-gritty of fintech marketing in 2023.

There’s a whole lot of difference in marketing when things are good versus when things are, well, not so good. With so many people tightening their budgets right now, getting new users means a) addressing the right users, and b) offering propositions that can actually impact their lives for the better.

Gone are the days of what Glover calls ‘freemium products’, or the ‘try it because why not’ approach. This year will be all about hyper-focusing on a core user base, and figuring out just how to present your product in a way that spells out ‘need’ rather than ‘want’.

What do you think are the biggest marketing challenges for fintech in 2023?

We're getting back to what’s called the quintessential business foundational principles that I think we all learn in business school, around building a profitable business and making sure that the path to profitability is short. We're no longer in this ‘grow by any means necessary’ mindset.

Historically, even starting with the Instagrams and Snapchats of the world, the approach was like this: go find 10, 20, 50 million users and never make them pay a cent. And we'll just keep giving you money, because we know, one day, we'll find a way to monetize those users.

That is a shift that we're moving away from, especially when it comes to fintech, where we need to make sure that we understand the lifetime value of a user and how we can make it so a user is profitable. From day one, I think some of the shifts that we're seeing is these freemium models going to subscription models, or if there is a free product, making it so that there are paywalls, after you've done a product-led growth type of model. With Slack, for example, you use it for a month, and then if you want to add five more team members, you have to pay for it. But within growth, it means making sure that you have go-to-market strategies and growth strategies built around not just driving users but driving profitable users.

What’s causing this shift?

I think some of the large companies that we've seen in the news lately have raised antennas in the market. If you're not able to turn a profit on your existing community or existing user base, you are much more vulnerable to losing the company to a big market shift, not having enough runway to continue through to profitability. 

Also, because of the market shift, we're seeing a lot of public comparisons. That’s because a lot of times the private market gets value evaluated based on how the public market’s doing. So, for example, public insurance companies aren't doing very well right now. That means someone looking to raise money for an insurance business is going to have a tougher time, because a VC that's looking to invest in a moonshot multibillion dollar business, in the hope of it seeing profit 10 to 20 years from now, is going to say, well, the market’s saying you're not worth what you could be in the future.

So what we're seeing right now is folks are looking to have business models entrenched at the very earliest stages of companies to make it so they're building for profitability and that the venture dollars that they take in can last as long as possible. And, naturally, the longer your venture dollars last, the more profit you're able to bring in as a business, and you're not just leaning on the continued venture dollars rolling in to make it so your business can stay afloat.

How is this shift affecting companies’ messaging when they reach out to new users?

Over the last decade or so, because of how great the market’s been doing, the approach has been more in line with let's just focus the messaging of our product on this idea of, "It's free – give it a shot," and let's just move as quickly as possible to understand how to best evolve this product and make users obsessed with it.

Now, though, messaging and the actual marketing of these products are going to need a little more finessing, because as we all know, lots of folks will try anything for free, but the second you put a price tag on it, as a consumer, there's so much more thought that goes into that purchase moment. And us as marketers, we are spending a lot more time now on measuring and getting in the minds of the top four personas that we believe are going to be most ideal for this product –  rather than just launching the product, and then figuring out who those potential users are after we launch it.

All this means understanding who those users might be, understanding what their median income is, where their location is, and really building out their user profiles, to then build the messaging around these user profiles, and most importantly, making sure that the product is actually going to impact their lives in a positive way. The product needs to be presented in a ‘need to have’, rather than ‘want to have’. I think that's also a shift. 

Right now, if a consumer is actually willing to pay for something, they're going to need it a lot more than just want it – especially when the entire economy is shifting in the way that we've seen over the last 6 to 12 months.

Zooming out, what do you think are going to be the big trends this year in terms of fintech marketing?

For one, I think fintechs will be leaning a lot more on strategic partnerships than spending money on paid marketing. I think everyone will still spend money on paid marketing, but they're going to be designing around doing a lot more testing and iterating versus just diving directly into the large, historic tried-and-true channels like Meta and Google search engine optimization. TikTok is also worth mentioning here. It’s becoming a much larger player than it already has been. Its technology around actually spending money on the platform is getting stronger. 

And then, I also think that the birth of the so-called micro- or nano-influencer is going to become really important. And just to expand on that a bit: historically, when it came to influencers, the story would go like this: let's go get an influencer that has 100,000 or a million followers – think Kim Kardashian – and let's sign them up and cross our fingers that if they post, it's going to turn into a massive conversion and we'll drive a ton of users. That's very much old-school. 

But there's a huge barrier of entry there: you need to have a certain amount of money to even play in that space. Because of this resurfacing of micro-communities, though, there's going to be this new focus on smaller-scale influencers – people who, let’s say, may just have 5000 followers reading their newsletter, but who are a very focused community. These are the ones who are going to start being activated as potential growth partners. They're going to be cheaper than the folks with a million followers, but they’re also going to have a much better relationship with their following. 

Because you mentioned TikTok, that makes me think of Gen Zers. How do you think fintechs will change their tactics this year in reaching this audience?

It's going to be huge. We've already been seeing this trend for the last 12 months. We led the Series A for a company called Copper, which is a bank for teens. We're a big believer that money's getting younger, and that people are working in a very different way then they used to. 

We're no longer living in the age of paper routes and lemonade stands. Folks are opening up their own Etsy stores, they're reselling shoes on StockX. They are looking for very creative ways to earn income at an earlier age, and, therefore, they're going to need to manage that money at an earlier age, and even think about paying taxes at an earlier age. So a lot of the clients that we're working with are constantly building out their Gen Z strategy. 

I'm also seeing a lot of companies that are being built specifically for the Gen Z world. And thinking about the solutions not just in terms of creating another checking or savings account, but thinking about what the future of work is going to look like, and accepting the fact that a lot of folks that are 14 right now, when they're 24, 34, or even 54, might have multiple part-time jobs that create a full-time salary, versus just going to look for one individual job that they're going to work at for the next 30 years and retire. So companies are living and breathing in this space right now, because we understand that the next generation is very, very close. And how they're engaging with the media is a massive shift. 

Think of iPhones: sometimes the next iPhone comes out, and you’re like, oh, cool, the screen is a millimeter bigger. And then there are some iPhones where it feels like a complete redesign. I think that's the point we're hitting right now within the space in terms of people's relationship with money.