For many, 2020 feels like a dream or at least like everything we once knew is being challenged. If FinTech leaders don’t reassess their understanding of the world’s relationship with financial services and adapt to this new reality, failure may be lurking around the corner. Conversely, if FinTech leaders pivot and continue forging innovative paths or rethink their strategies, success is within reach.

In times of tighter budgets, FinTech leaders need to zone in on the delivery of products and services that sustain or create net-new fiscal flow. Innovators enjoy less room for trial and error, as investors are generally less willing to gamble with their dollars. A two-pronged strategy can help companies survive the pandemic-induced economic downturn.

First, think about necessities that have arisen amidst the coronavirus crisis and your company’s capabilities to help banks, credit unions, credit card and payments companies meet these new needs. For example, the urgency for automation in the financial services industry has been heightened over the last five months. In times of economic downturn, when headcount reduction is sometimes unavoidable, organizations often have no choice but to evolve and adopt new technologies that help them automate processes. Many of ENACOMM’s customers have been forced to reduce their call center staffs, for instance – but these financial institutions, credit card and payments companies still need to create a positive customer experience (CX). That’s where intelligent customer self-service technology, such as AI-powered conversational banking, is solving the problem. Bank of America reported that 10 million users had downloaded its digital assistant known as Erica as of year-end 2019; the bank added one million Erica users per month from March through May 2020 during the pandemic! Clearly, the importance of digital banking technology skyrocketed almost overnight.

More broadly, FinTech leaders can identify fertile ground by asking, “What processes can my company automate within the financial services industry that previously were managed by humans?” Other opportunities for innovation uncovered by the pandemic include technology solutions pertaining to safety, fraud, and remote banking and payments.

The majority of the technological changes spurred by the pandemic will not be reversed, even after the virus is long-gone. Therefore, FinTech leaders should think beyond solutions that are just stop-gaps. The second prong of your survival strategy should be adopting a business model that will generate predictable revenue over the long-term.

Rather than depending exclusively on one-time sales, delivery execution and post-support, financial technology providers should be positioning for the coveted, ever-present and predictable recurring revenue model. Subscription-based, service bureau, and software or platform-as-a-service offerings are clearly leading against capital expenditures and premise-based investments. Rapidly proliferating, these types of solutions are driving the technological transition of a wide spectrum of enterprise-level B2B and B2C organizations. The competitive landscape is evolving for small to medium-size banks, credit unions and card payment providers by enabling technology parity.

The subscription model entices these markets with discounted pricing via multi-year contracts. A win-win, FinTech leaders can focus on bringing their products and services to market for less, and their customers have access to the latest technologies without the burden and headache of operations and infrastructure sustainment. With this revenue model, FinTech leaders can lock in monthly, quarterly or even yearly payments. It helps level significant revenue ‘blips or dips’ from one-time cash or revenue treatment anomalies and edge-case or outlier revenue windfalls, while hedging against down periods.

Recurring revenue is also highly sought after by tech investors and the greater private equity community. From a financial reporting standpoint, subscription models enable the revenue recognition method (typically referred to as ‘Ratable’ or ‘SaaS’ rev-recognition), which converts cash from bookings into revenue within your business. It's an accounting principle for reporting revenue by recognizing the value of a transaction or contract over a period of time. Revenues are recognized when they are realized and earned, usually when goods are transferred or services are rendered, no matter when cash is received. In contrast, with cash accounting, revenues are recognized when cash is received, no matter when goods or services are sold.

What’s equally important, the subscription approach will enable FinTech providers to work with organizations for an extended period of time – providing a solution and navigating issues together to take care of the customer’s needs. Building relationships during that time can result in repeat business in the form of contract extensions. The prolonged relationship provides the opportunity to intimately understand customers’ businesses, as well, opening doors to additional ways to serve them.

To more effectively survive the pandemic economy, followed by the climb toward recovery, FinTech leaders should reevaluate the financial services industry’s needs and how they’ll be forever changed. This reassessment doesn’t necessarily mean that everything we once knew is no more, but it does mean that revisions to offerings and business models may be necessary to achieve buoyancy.

This is not a dream – but 2020 has indeed changed our reality.