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Why fintechs should focus on research and development

If you think about it, it's odd to advocate more research and development for fintechs, but it is something we need to bear in mind at all times.

Innovation is hard wired into our DNA, but often it´s front loaded. We're natural disruptors, wanting to take on what is already out there, and we launch our product with a great push in all stages of the journey.

But it can be a journey in one lane. It’s easy to lose focus. As you gather momentum, it´s easy to forget that you have to keep innovating, keep mixing it up, otherwise you can quickly get stuck and even go backwards.

R&D is hard, the results aren’t always known and can often fail. Once we find something that works, we want to capitalize on it and bask in the glory of that success. Doing so, however, is a recipe for disaster. Anyone remember Yahoo of the early 2000s vs today? How about Blockbuster? And the long, sad list of companies that failed to continuously innovate goes on.

Ages poorly

R&D ages poorly. Success breeds interest, both from customers and competition. A stagnant product set, brought about by a lack of R&D and Innovation, opens the door for competitors to out-flank you and take you out of the game. This is especially true with dealing with well-funded, innovative companies such as unicorns.

To remain competitive, a fintech must become adept at effective R&D investment with a focus on results and bringing that resulting technology to market. Either way, this requires a continuous focus on R&D.

This is true despite the many challenges that come with R&D and Innovation. There are always competing priorities. R&D takes time, and time is never on the side of a fintech startup. Investors want to see products in the market and revenue generation faster. Budgets can run low and the customer base never stands still.


So then, how does one establish this balance? Part of it is results-based R&D. There’s a temptation to get caught in an exploratory mode. Exploring new ideas and concepts, trying out new use cases and not getting anything to market. It’s essential therefore to keep a tight feedback loop between the key teams within the company: sales, product, design, and engineering. You need to ensure teams are aligned and the R&D has long-term.

It requires discipline to be done properly and to maintain engagement. The nature of a startup is that everyone is busy. It’s ultimately up to the leadership group to ensure R&D remains a priority across the company.

It’s therefore essential that startups be agile in continually learning from their R&D and adjusting as needed.

I was co-founder in a startup about 12 years ago utilizing a multiple-objective evolutionary algorithm. Our company hypothesis was based on a very tactical use case that impacted day-to-day operations. What we discovered was that there was a secondary use case that worked in a more strategic sense and would help our customers plan over a far longer timeframe.

It perfectly demonstrated the value of R&D to me and how it has a crucial role to play.

Straight to market

The temptation of course is to go straight to market with a product. Short circuit the R&D element and give investors want they want, dollars. You always must remember that time is never on the startups side. Budgets run low and what the competition is doing is always a concern.

But, R&D is the differentiator, or the moat from other technologies. What makes a product different from other me-too products, or legacy providers that have deep pockets and established market share.

Without this moat of new technology being derived from R&D, which separates a company from its competitors, a startup will likely find itself awash in the noise from the market. The value proposition to the customers falls short and it ends up in a mess.

Investors’ demands

So, my advice for all startups is forget R&D at your peril. Yes, you need to listen to investors’ demands and even more so these days in what is a tougher environment, but don’t just cave into the easier solution. R&D delivers the future elements of what your product will need to survive and prosper.

R&D gives you insight and product depth, and that is crucial for the future.


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John Rutledge

John Rutledge


HolyWally Pte Ltd

Member since

28 Nov 2022


Colorado Springs, Co

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