Archive for August, 2016

Fintechs Need Guts More Than Lawyers!

Friday, August 26th, 2016

fng-fiIn Part 1 titled “Fintechs Need Marketers And Lobbyists – Not Lawyers”, we saw why marketers and lobbyists play a vital role in a fintech startup’s success and how successful startups in heavily regulated industries don’t seem to have consulted lawyers while conceptualizing their offerings.

In this second part, we’ll examine the merits of the following middleground approach advocated by some other pundits:

Avoid lawyers until the Minimum Viable Product (MVP) is ready, then go to lawyers and listen to what they say, understand the regulatory risks and work out a mitigation strategy, then only commit resources to building out the MVP into a fully fledged product.

I wish I could agree with this advice and meet these pundits midway but no successful startup in any heavily regulated industry I know of has taken this approach. Not sure why but I can guess at least three reasons for this:

  1. Startups simply don’t have the resources to do anything other than what is critical to fulfill their core mission. And that needs marketers and lobbyists, not lawyers, as we saw here.
  2. Regulation is generally too ambiguous to guide a new product or service. According to the ET SUNDAY article titled Meet the alternative lending startups, “Around a year ago, the founders of altflo, a startup in Chennai, began the process of building a platform to match investors and investees, but discovered that India’s regulators haven’t defined the equivalent of an accredited investor …, so regulations around private investments involving issuance of securities are hazy.” Stateside, the situation seems even more ambiguous: According to American Banker article titled “Fintech Firms Hurt by Lack of Regulatory Clarity”, there are 50+ financial services regulators and no one knows exactly how many of them have jurisdiction over fintechs! “That leads to confusion about how a firm will be subjected to regulatory oversight”, observes the author of this piece, Richard Magrann-Wells, EVP for Willis Towers Watson Financial Institutions Group. (Going by personal experience and Magrann-Wells’ comment to American Banker, UK seems to be an exception to this otherwise global issue).
  3. fng01The ability to take risks is in the DNA of a startup. Risk-aversion is simply repugnant to the context and style of a startup. The whole “understand risk, mitigate risk” framework of doing things is enterprise-world luxury and results in checking the “do nothing” box in the business plan. In fact, realizing this, many progressive corporations are setting up inhouse accelerators and motivating their members to think out of the box, telling them “we’ll think about regulation later”.

Ignoring risk and mitigation does appear to be a part of the playbook of many successful startups in highly regulated industries. Fintechs should however be warned that this playbook comes with several hazards:

  • In its early days in 2010, Uber was served a cease-and-desist order in San Francisco and was threatened with 90 days in jail for each day the company remained in operation past the order (Source).
  • According to legend, Uber’s Cofounder Travis Kalanick was once warned to skip office where two police officers were waiting to arrest him. Many years after they were founded, Uber and AirBnB are still mired in controversy in many cities where they operate.

It takes guts to follow this approach.

If fintech founders have the guts, they should go for it. Not to a lawyer.

If not, they won’t gain anything by going to a lawyer anyway.

Fintechs Need Marketers And Lobbyists – Not Lawyers

Friday, August 19th, 2016

fnml-fiLike startups in any other industry, fintechs need to find a problem to solve, develop a solution, package it in such a way that it provides a compelling reason to use, and thereby gain mainstream adoption. SQUARE and PayZapp are two fintechs that have a good job of this for reasons I’ve covered in my previous blog posts here and here.

This requires marketers.

As a tech marketer, I may be biased in saying this but I doubt if anyone will really dispute the role of marketing in a fintech’s quest to fulfill its core mission outlined above.

Now, unlike many other industries, fintech operates in a regulated space. Therefore, at first blush, it might appear that fintechs should involve lawyers at the very early stages of conceptualizing their offering so as to ensure that it complies with prevailing regulations. Many pundits advocate this approach e.g. the author of this Finextra blog post.

With due respect to lawyers, the playbook of successful startups in many heavily regulated industries would suggest otherwise.

We probably wouldn’t have a Uber today had its founders bothered to flesh out legal status of their proposed car ride service amidst the regulated taxi industry. Ditto for AirBnB vis-a-vis hotel regulation.

Startup success in any industry is driven by speed and innovation. Fintech is no expection.

In a relatively old industry like financial services, traditional banks eventually wake up and do most things that can be done under the purview of existing laws, especially since they have a solid track record of partnering with technology suppliers for ages. Sometimes, when fintechs show the way to exploit regulatory gaps, a few banks have turned fast followers and figured out a way to deliver even better solutions e.g. PayZapp.

Therefore, opportunities for innovation for nonbank fintechs lie more often than not in “regulatory gaps”. Now the scope of “regulatory gaps” varies from country to country, depending upon its local culture and so on, but it broadly includes regulatory arbitrage, legal ambiguity and areas on the fringe of the law.

Regulatory gaps are not illegal. But very few dyed-in-the-wool lawyers would readily approve them as a core offering of a fintech. By the time the lawyer comes around and changes their view, it may be too late.

Should fintechs forever be into the “not illegal” stuff?

Absolutely not.

fnml03Like successful startups in other heavily regulated industries, successful fintechs will be the ones that launch, gather enough traction and use that traction to shape legislation to their own advantage ex post facto. This approch is described very well in the Fast Company article titled “The Food-Sharing Economy Is Delicious And Illegal—Will It Survive?”.

“As startups launch in heavily regulated industries such as food, health, transportation, and housing, clashes with the law have become as common in Silicon Valley as office ping-pong tables. The MOST COMMON APPROACH to these regulatory battles—successfully embraced by lodging site Airbnb, ride-hailing app Uber, fantasy football site FanDuel, and DNA testing and analysis company23andMe— is to IGNORE THE TROUBLESOME LAW as long as possible. For a long time, the advice was, just keep your head down, build the kind of network you need to be viable, and then once you have viability, NOBODY IS GOING TO BE ABLE TO SHUT YOU DOWN. If Uber had gone to the regulators first, the entrenched interests would have CRUSHED THEM IN SECONDS. What might have been easy for regulators to squash in a startup is another matter after the offending business becomes one of the most valuable private companies in the world. When New York City Mayor Bill de Blasio threatened to limit Uber’s expansion last summer, (Uber) … orchestrated a campaign… that showed users a dystopian world in which they must wait 25 minutes for a ride. The mayor backed down.” (capitalization mine for emphasis).

This requires lobbyists.

And, according to Fast Company,  they seem to be using them heavily: “…when Airbnb faced a San Francisco ballot measure that would have restricted short-term rentals, the company spent $8 million to successfully lobby against it.”

So, fintechs, decide for yourselves whether you need lawyers – or marketers and lobbyists!

Omnichannel Couponing Drives CEM Success – Part 2

Friday, August 12th, 2016

In Part-1 of this blog post, I’d described my experience of participating in PayTM’s CEM campaign on Nescafe’s instant coffee bottle.

In this part, I’ll describe my experience with the sachet of the same product.

Trust me, the challenges and learnings pertaining to the CEM campaigns on these two form factors are quite different.

paytmnescafe16Because the sachet offered large enough real estate, PayTM could insert detailed instructions on how to submit the code on the Nescafe microsite of its website. But I faced a different problem here: I just couldn’t find the code! Surprisingly, the otherwise detailed instructions didn’t mention where exactly the code was printed. I called Nestle’s Customer Care number given on the sachet and the rep who came on the line told me that the code was engraved below the fssai mark (which was clearly visible). Even before I asked, he clarified that they couldn’t resort to the conventional approach of printing the code on the inside surface of the sachet. While that’d have made the code clearly visible, the pigment inks used for printing wouldn’t go well with food. Instead, they had to use laser technology to engrave the code, which made it ‘food-grade’ albeit almost invisible.

Anyway, I squinted my eyes closely at the required spot and was able to find the code. Submitting it on PayTM’s website was a breeze, not only because I’d prior experience with the bottle but also due to the detailed instructions that PayTM was able to print on the sachet.

As with the bottle, PayTM faced a challenge in the couponing process with the sachet. The solution it used in this case was to trigger a hop to the phone channel.


By following the omnichannel approach to couponing, I’m sure PayTM has improved the success rate of its CEM campaigns. While I can think of a few areas of improvement – e.g. print the coupon on the outside surface of the sachet where the pigment inks won’t come in contact with the coffee granules – PayTM has done a great job under the circumstances.

It’s obvious that brands need an omnichannel Customer Engagement Management system to support their omnichannel couponing approach. The CEM system should also support a wide variety of communication channels so that as many hitherto anonymous customers as possible are able to find a channel suitable to them to submit the code to the brand.


Birdvision Consulting is the provider of one such best-in-class omnichannel CEM platform. With the availability of a broad array of channels shown above, Birdvision’s enrollment module BVC-CONNECT is geared up to support omnichannel couponing and frictionless enrollment for FMCG, CPG and other industries.

(Full Disclosure: Birdvision Consulting is a GTM360 customer.)

Omnichannel Couponing Drives CEM Success – Part 1

Friday, August 5th, 2016

paytm-nescafe-fi-3Barring a few exceptions like Dollar Shave Club, consumer brands still don’t sell their products directly to people who use them. Because they use the traditional multi-tiered distribution channel comprising of distributors, wholesalers and retailers, their end consumers are anonymous to them.

How then do brands reach out to end consumers and engage with them, which we’d claimed is a marketing best practice in our recent blog post Whose Customer Am I?

Enter Customer Engagement Management.

The first goal of a CEM software is enrollment, which is the process by which a brand identifies its end users and collects some Personally Identifiable Information (PII) like email address, mobile number, zip code, and so on. In the case of fast moving consumer goods, this happens via “couponing”. In this process, the brand embeds a unique code in / on the product. When a consumer buys the product, they scratch off a panel to see the code. They then submit the code to the brand using a suitable communication channel such as missed call, SMS, email, website, mobile app or even snail-mail.

Voilà. Armed with the end consumer’s contact information, the brand can now proceed to engagement and encashment, which are the subsequent stages in the CEM journey.

Since couponing is the first step in the long customer engagement journey, it’s crucial for brands to get it right.

That said, couponing is not easy, especially if it involves a third-party product. Challenges range from where to insert the code, making the code large enough to be visible but small enough to fit on the existing product packaging through to ensuring that there’s enough space on the label for providing instructions on how to submit the code.

As you can see, some of these factors are not within the brand’s control. How, then, does it ensure successful couponing?

In short, by using an omnichannel approach.

For the uninitiated, in the classical multichannel approach, a given process can be executed end-to-end on every channel viz. instore, telephone, web, mobile, social media. In contrast, omnichannel allows a given process to be split across multiple channels such that each channel does what it’s best at. More details can be found on our blog post From Multichannel To Omnichannel & Beyond.

Specifically, in the context of couponing, brands should do whatever best is possible on physical channels and use their digital channels to compensate for the shortfall.

I’ll illustrate this with the recent example of PayTM.paytmnescafe12

India’s largest prepaid mobile wallet recently ran CEM campaigns with many third-party consumer brands. I’d a chance to try out the one with Nestle’s Nescafe that worked as follows: Buy a 50 gram bottle / sachet of Nescafe Classic instant coffee and get INR 60 cashback on your PayTM account. (Not sure what Nestle got from this campaign but I’d be surprised if there was nothing.)

I first bought the bottle. I could spot the PayTM INR 60 cashback offer on the front of the label and the scratch panel on the back of the label. But I couldn’t find any instructions on how to redeem the coupon. Under normal circumstances, I’d have bailed out at this stage. However, I decided to be more patient this time because I’ve known PayTM to deliver superior CX in “stealth mode” in the past!

I scratched off the panel on the back of the label and obtained the code. When I went to, I couldn’t find any place to enter the code. So, I performed the most prominent CTA on the homepage, namely, top up my mobile phone.

paytmnescafe15After entering my mobile phone number and the topup amount, I clicked the “Proceed to Pay Bill” button. On the next screen, I was able to see a “Have a Promo Code?” hyperlink. I clicked the link and entered the code printed on the Nescafe bottle. I then clicked the “Apply” link. Turns out this was not the right place to enter the code. But, unlike most other websites that would flash a staid “Code invalid” type of error message and refuse to go further, PayTM responded back with a helpful error message “This code is applicable only on”. For some reason, the link wasn’t clickable but it was not a big deal to type in the URL into my browser, visit the Nescafe microsite, and submit my code. I got a message confirming that my couponing was successful.

PayTM probably found no room to print the full couponing instructions on the bottle, anticipated potential problems from the shortfall and bridged the gap by directing people to on its website.

In this manner, PayTM used an omnichannel approach to improve the success of its CEM campaign.

In Part-2 of this blog post that will be published next week, I’ll describe my experience with the 50 gram sachet. Stay tuned!

(Spoiler Alert: Challenges and learnings are different between bottle and sachet!).