Another Challenge to Fintech Growth Execution: Capital Markets

Interest Rates Force Execution Changes

Rising interest rates have increased the cost-of-capital for all fintech vendors. The tech-heavy NASDAQ is down 27%. Some private vendors have lost 80% of their valuations. The index below of FinTech IPO Performance was down 49% in 2022 and 74% from its high in February 2021.

All fintech vendors must conserve cash vs. the last decade. Investors are demanding business plans that create scale, not just expansion.

Rising interest rates have increased the cost-of-capital for all fintech vendors. The tech-heavy NASDAQ is down 27%. Some private vendors have lost 80% of their valuations. The index below of FinTech IPO Performance was down 49% in 2022 and 74% from its high in February 2021.

All fintech vendors must conserve cash vs. the last decade. Investors are demanding business plans that create scale, not just expansion.

The Challenge for Growth Execution

Most younger firms and younger products made it past infancy by proving buyer demand. Usually, those sales are to whichever markets will make the purchase. Often, those early deals are partially custom. The vendor ends-up with having sold a couple (or more) in multiple markets with multiple product editions.

With combinations of markets and products, the business can’t scale. It must now prioritize its investments. Sales and marketing resources are being spent in several markets, and development is happening for several products. The business is doing too many things that are not repeatable. The rate of cash burn is unacceptable.

Proven methods exist to deal with this challenge.

Market-Product Prioritization Method

The following approach will result in an inventory of existing and new markets and products. Markets and products will be matched in pairs (“product X in market Y”) and tagged with whether they are (1) part of the existing business, (2) an opportunity for new revenue, or (3) out-of-scope for growth over the planning horizon. Each market-product pair is a potential revenue source subject to the evaluation below.

At a high-level, an assessment of the payoff from each of the in-scope market-product pairs, and the effort associated with capturing those pockets of revenue is developed and used to determine the priority scheme.

The foundation of this method is represented via the simple graphic below, considering a digital banking vendor serving US CU’s. Fundamentally, a business can grow in two ways, (1) sell new products to existing markets (e.g., “Billpay for US CU’s”), or (2) sell existing products to new markets (e.g., “Digital Banking for UK Building Societies”)

Selling new products to new markets (e.g., “Billpay for UK Building Societies”), is a high-risk, cash-intensive strategy. Many young companies/divisions find themselves there, having sold “a little here and a little there”.

Create an Inventory of Potential Revenue Sources

Time Horizon

Setting the priorities must be undertaken over a time horizon, like 3 years. The priorities will be a firm commitment over that horizon, as of the date of the exercise. The priorities can be changed based on new, compelling information, including revenue actuals.

Itemizing Markets

The fintech vendor starts by making a list of the market verticals it is currently in or might be over the time horizon. Each is tagged as an existing, new, or out-of-scope market.

The “existing market(s)” are those with considerable revenue. A few opportunistic deals here and there do not represent existing markets.

A vertical is a group of buyers that has identical needs (including non-functional needs, not just software needs). As an example, US FI’s under $500mm will have different needs than those over $100bn, but the needs of smaller banks vs. credit unions might be similar enough to consider them a single vertical.

Itemizing Products

Like markets, the vendor lists all the products it has sold and is selling. A product is something that can be bought on its own. The intent is to avoid dropping to the feature-level. Like markets, they should be tagged as existing, new, or out-of-scope with “existing” meaning that significant revenue exists.

Itemizing Use-Cases

This exercise isn’t 2-dimensional (market/product). The third dimension is the use-cases within a market. The vendor considers this issue in terms of the customer journey of the fintech vendors’ clients’ customers. As an example, a cloud-core vendor may consider account servicing an existing case while account opening is a new case.

Evaluate the Combinations

Each market-product-use-case combination are evaluated on 3 criteria: Payoff, Effort, and Likelihood-to-Succeed. Precision is not required in any of these ratings. Given the way these estimates are used (described below), even lacking much data, an educated guess may be good enough.


Over the time horizon, the revenue should be estimated, including the existing market-product (i.e., organic growth). The growth rate coming from the sum of the opportunities can then be compared to the firm’s target growth rate to evaluate revenue sufficiency.

If the vendor has no idea of the potential revenue, then the opportunity should be out-of-scope.


The payoff must be evaluated in the context of the effort it will take to capture the revenue, including efforts needed to capture the existing market-product revenue.

It is not sufficient to consider only whether there is software to be developed. Other parts of the business model will likely need an investment to capture the revenue source. “Other parts of the business” can be address via a Whole-Product perspective. For each revenue source, the vendor simply indicates (Y/N) whether there is effort required for each Whole-Product business function.


The estimation of success for each revenue source includes considerations like vendor skills/bandwidth, similarity to prior successes, risks, and competitive position.

Select the Priorities


Each revenue opportunity is scored on each of the 3 metrics: Payoff, Effort, and Likelihood-to-Succeed. Opportunities are given a score of High or Low for each of the metrics. There is no need to be more granular than High/Low.

The H/L scores are relative ratings. This forced-rating will avoid too many being “High”. So, across 6 revenue opportunities, there should be 3 H and 3 L for each metric.

For Payoff, the revenue sources with the highest revenue estimates will receive a High. For Effort, the sources with the highest number of business functions with a “Y” will get the High. Likelihood is judged as High or Low.


Each revenue source will emerge with a H/L rating on the Payoff, Effort, and Likelihood metrics. There are 2 patterns to discern right away:

  • Payoff=H, Effort=L, Likelihood=H is a winner and a high priority
  • Payoff=L, Effort=H, Likelihood=L falls out-of-scope.

The other patterns are considered as follows.


Priorities are expressed as simple timing concepts: Now, Next, Later, and Maybe Someday. It is not recommended to use actual years. Absolute time will be determined by the Execution step, below.

Those with the H/L/H pattern are Now and those with L/H/L are Maybe. The others require discussion and judgement calls. Sanity checks will be applied like “Are there too many Now?” in which case prioritization has gained nothing. There are other checks.


The last step in the process converts the “Now” (only) priorities into the initiatives required to capture the revenue. Those initiatives come from the list of business functions marked with “Y” in the Effort scoring. As examples, the new revenue may require a change in marketing, new partners, etc. Initiatives are defined for each such change.

That list of initiatives is managed as a formal program. Once the Now initiatives are well underway and resources begin to free-up, the same process can be repeated for the Next initiatives.

About Author:


With over 25 years of experience, Bill Kinnelly is CEO of KGA Advisory. Previously, he has held executive Product Management and Marketing roles at leading fintechs that serve banks, billers, lenders, merchants, and processors. His firm’s offerings included mission-critical solutions that enable Compliance, Wholesale Payments, Bill Payment, Online Banking, Fraud, Customer Care, Merchant Processing, and Collections, to name a few. Bill has been the fintech executive frustrated with failed growth strategies. Now, he works with the CEO/GM (depending on fintech size) who is responsible for growth strategy execution. Together, they ensure the realization of scalable, repeatable, profitable growth.

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