5 questions about fintech marketing in 2023 with Fiat Ventures founder Drew Glover – Tearsheet

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

In this Q&A, Glover dives into fintech marketing in 2023.

There’s a 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) reaching out to the right users, and b) offering suggestions 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 about hyper-focusing on a core user base, and figuring out how to present your product in a way that explains “needs” rather than “wants.”

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

We come back to what are called the fundamental business 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 are no longer in this “wax by any means necessary” mindset.

Historically, even from the Instagrams and Snapchats of the world, the approach was: 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 that one day we’ll find a way to monetize those users.

It’s a shift that we’re moving away from, especially when it comes to fintech, where we need to make sure we understand the lifetime value of a user and how to make that user profitable. From day one, I think some of the changes we’re seeing is that these freemium models go to subscription models, or if it’s a free product, make 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 if you want to add five more team members, you have to pay for it. But within growth, that means making sure you have go-to-market strategies and growth strategies built around not just driving users, but driving profitable users.

What causes this shift?

I think some of the big companies that we’ve seen in the news lately have raised their antennae in the market. If you fail to monetize your existing community or existing user base, you are much more vulnerable to losing your company to a major market shift, and not having enough runway to continue to profitability.

Due to the market shift, we also see a lot of public comparisons. That’s because the private market is often valued based on how the public market is doing. So, for example, public insurance companies are not doing so well right now. That means someone looking to raise money for an insurance business is going to have a tougher time, because a VC looking to invest in a moonshot multibillion-dollar business, hoping to see a profit 10 to 20 years from now, is going to say, well, the market says you’re not worth what you might be in the future.

So what we’re seeing right now is that people want to have business models rooted in the very earliest stages of companies to make it so that they build for profitability and that the venture dollars that they take in can last as long as possible. And of course, the longer venture dollars last, the more profit you can bring in as a business, and you’re not just relying on the continued venture dollars rolling in to keep your business afloat.

How does this shift affect companies’ messages when reaching new users?

Over the last decade or so, because of how well the market has done, the approach has been more along the lines of let’s just focus the message 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 best to develop this product and get users obsessed with it.

Now, however, messaging and the actual marketing of these products will need a little more fine-tuning because as we all know, many people will try anything for free, but the second you put a price tag on it, as a consumer, there’s so much more on the mind which goes into that moment of purchase. And we as marketers spend a lot more time now measuring and getting into the minds of the top four personas that we think will be most ideal for this product – instead of just launching the product, and then figuring out who the potential users are is after we launch it.

All of this means understanding who those users might be, understanding what their median income is, where they’re located, and really building out their user profiles, then building the messaging around those user profiles, and most importantly, making sure that the product is actually will impact their lives in a positive way. The product must be presented in a “need to have”, instead of “want to have”. I also think it’s a shift.

Right now, if a consumer is actually willing to pay for something, they’re going to need it much more than just have it—especially when the whole economy is changing the way we’ve seen in the last 6 to 12 months.

Zooming out, what do you think will be the big trends this year in fintech marketing?

First, I think fintechs will lean much 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 designed around doing a lot more testing and iteration as opposed to just diving straight into the big, historical, proven channels like Meta and Google SEO. TikTok is also worth mentioning here. It is becoming a much bigger player than it already has been. The 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 be very important. And just to expand on that a little bit: historically, when it came to influencers, the story would go like this: let’s get an influencer who has 100,000 or a million followers—think Kim Kardashian—and let’s sign them up and cross our fingers that if they post, there will be a massive conversion and we will drive a ton of users. It’s very old fashioned.

But there is a huge barrier to entry there: you have to have a certain amount of money to play in that area. However, because of this resurgence of micro-communities, there will be this new focus on smaller-scale influencers – people who, say, may only have 5,000 followers who read their newsletter, but are a very focused community. These are the ones who will begin to be activated as potential growth partners. They’re going to be cheaper than the people with a million followers, but they’re also going to have a much better relationship with their followers.

Because you mentioned TikTok, it makes me think of Gen Zers. How do you think fintechs will change their tactics this year to reach this audience?

It’s going to be huge. We have already seen this trend in the last 12 months. We led the Series A for a company called Copper, which is a bank for teenagers. We strongly believe that money gets younger, and that people work in a completely different way than they used to.

We no longer live in the age of paper routes and lemonade stands. People open up their own Etsy shops, they resell shoes on StockX. They are looking for very creative ways to earn money at an earlier age, so they have to manage the money at an earlier age, and even think about paying taxes at an earlier age. So many of the clients we work with are constantly building their Gen Z strategy.

I also see many companies 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 people who are 14 right now, when they’re 24, 34, or even 54, can have multiple part-time jobs that create a full-time salary, as opposed to just looking for an individual job 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 engage with the media is a huge shift.

Think about 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.