Creating fintech-products that stick

October 18, 2022

Also this week:

  • Lunar 💔 Instabank

  • 😓 PSD2 - not what we thought it would be

Creating products that stick

Greg Eisenberg, CEO of Late Checkout, has written a great blog post on a framework for building products that stick: The single-player vs. multiplayer framework.

Single-player

A single-player product is a product that you get value by yourself, and you don't need to use it with friends for it to be helpful. The more sticky your single-player experience is, the more trust you build with your users.

For example, he lists the todo-app Things and fasting-app Zero, which you use yourself and become part of your daily habit. Most banking apps land in this category.

Multiplayer

You need a group for a group chatting app to work. That's why Discord (or Slack) have intricate onboarding flows for new admins to invite their friends/communities into the product.

They know that the "ah-ha" moment happens when the community is there.

Multiplayer apps don't have value when you use the app on your own, and Slack is, for example, useless without co-workers.

Single-player and multiplayer

Products that combine single-player (retention) and multiplayer (word-of-mouth) is the holy grail. A great example is Figma which provides value as a single-player but spreads faster when you invite your co-workers and can work together.

Vipps is also a great example of this in the Fintech space. One of the reasons for Vipps' success is that it was (probably) the first multiplayer banking product in Norway. You had to have Vipps to receive and send money to others and they got the flywheel spinning this way. Then they went into the payments space, making it easy to use as a single p(l)ayer in web stores.

Multiplayer has untapped potential within Fintech. Banking still is (mainly) a single-player product. Yes, we have partners, co-borrowers, and families, but where are the multiplayer solutions? Even in insurance, where you are insured as a family, it is primarily single-player solutions and overviews. Money is still handled as a single-player game, while our households are not. Why is that? Regulations are probably part of the answer, but I believe it's still possible to create great products which combine single- and multiplayer experiences within Fintech!

Lunar 💔 Instabank

As we've written about before, Lunar's plan of buying Instabank got delayed because of equity requirements by The Financial Supervisory Authority of Norway. Lunar hasn't been able to raise enough money to reach the requirements needed to buy Instabank and had to give up its attempts to buy Instabank.

Naturally, Instabank wasn't too happy and is threatening with legal aftermath. According to experts, Instabank has a weak compensation case against Lunar.

While we're talking about Lunar: Last week, they opened their solution for small businesses. It will be a corporate bank that is tailored for micro-enterprises and entrepreneurs. To begin with, the service will contain essential products, such as accounts, cards, and bill payments.

😓 PSD2 - not what we thought it would be

DNB is reporting to Shifter that PSD2 has not yet become the threat they thought it would be. The discussion about the PSD2 APIs' quality and usability has been a topic since the directive was introduced over two years ago. The fintech challengers have been anything but satisfied with what the banks have delivered, which has led to heated exchanges between the players, as we've written a lot about over the years.

The latest news is that Neonomics notifies the Norwegian Competition Authority of possible breaches of the law by the banks. This time, the core of the dispute this time is payee-initiated transactions. Neonomics believes that third-party actors should be able to offer their own "Avtalegiro"-solution for recurring, varying payments such as electricity bills and mobile subscriptions where the user can't perform a strong customer authentication (SKA).

The premise behind PSD2 was that if the bank offers something in its regular channels, it must also provide it in the PSD2 interface. But when it comes to payee-initiated transactions, the banks don't provide this. In fact, the banks mean that The Financial Supervisory Authority of Norway makes an unreasonable interpretation of what the banks are obliged to do according to the PSD2 directive. Maybe this is one of the reasons why DNB hasn't seen the threat of PSD2 yet?

That's it for this week 👋

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Marius Hauken, partner Stacc X