Closing the gap between sales and revenue for B2B fintechs

Fintechs risk losing sales due to long backlogs, slow revenue recognition, product roadmap delays, developer attrition and unhappy customers because of this one thing.

The B2B fintech space is booming, more financial institutions than ever are making strides towards digital innovation. Case in point, for the first time in the history of Bank Director’s Technology Survey, in 2020 the majority of bank executives believed the digital channel surpassed the importance of branches for growth. B2B SaaS fintechs have managed to capture a host of opportunities to improve banking technology across account opening, digital banking, lending, core systems and more. However, for many of these fintechs a large gap stands between making a sale and actually recognizing the revenue from it – implementations.

Often fintechs start out choosing to complete implementations in house, however, they quickly face these challenges: 

• Lack of flexibility. Internal developer capacity can become scarce, leading to implementation backlogs and slow revenue recognition from sales.
• Sales friction as result of long implementation backlogs.
• Product team is pulled into implementations and away from creating market-leading features, resulting in missed release dates which risk diminishing the fintech’s market share. 
• Developers at product companies tend to dislike working in client services, resulting in retention issues. 
• Sales teams can become frustrated with the delay on their commissions as a result of implementation backlogs. 

These challenges can leave CEOs, CTOs and Product Leaders in a tough spot trying to balance client needs and expectations with the limited resources: 

• Some financial institutions may be unwilling to work directly with outside vendors making it difficult to outsource. 
• Hiring team members for implementations can be a drag on profitability without a consistent pipeline. 
• Some clients require customized front-ends and integrations which pull the company into a professional services discipline. Professional services revenue can dilute company valuations by up to 50%, complicating M&A options down the line. [1] 

So what can be done? 

Fintechs can adopt a hybrid implementation approach by augmenting their internal team with white labelled product implementation specialists, designers, developers and agile project managers. This blended team approach is the best of both worlds when it comes to working with highly regulated clients such as banks who will not work directly with a partner company for their implementation. 

With a hybrid implementation team, the fintech can: 

• Access burstable capacity that can flex to a fluctuating pipeline.
• Offer highly customized implementations with added expertise in UX/UI and banking technology, all with no wait time.
• Recognize revenue in weeks not months.
• Maintain full focus on innovating and improving the product. 

How can fintechs find a reputable partner? 

A hybrid implementation approach requires a trustworthy partner with expertise in banking and financial services; along with a willingness to invest their time to learn the product, brand promises and employ the same security practices as the fintech, so that they can deliver a matched service to internal teams.  

Product leaders should consider the following aspects when vetting partners:

• Experience and referenceable clients (have they done this before?)
• Client reviews (do they do what they say they will?)
• Stability of the company (how long have they been around?)
• Team structure (how will they integrate with the existing team?)
• Location (do they have US based team members for regulated clients?)
• Price (will their rates impact profitability?)

About Praxent

Praxent is a fintech design, engineering and implementation partner with over 20 years of experience. Specialized in fintech, banking, wealth management, lending and insurance, the team has strong expertise in user-experience design, security and compliance, technical strategy, agile project management, implementations and core banking systems. 

As an implementation partner, Praxent serves clients in both a white labelled and named partner capacity. Trusted client relationships are our north star so when we choose to partner with a fintech for implementations, we ensure our developers and implementation specialists have a minimum of 20 hours of sand-box experience (covered by us) before taking on clients.

If you’re interested in partnering with Praxent to deliver world class customer experience design, robust integrations and thorough implementations with a focus on client service; schedule a call with us here. Or email hello@praxent.com.