67% of FinTechs Prioritize Mobile Capabilities to Drive Growth and Engagement

FinTechs are pursuing modernization to stay competitive, focusing on mobile capabilities and enhancing user experience.

According to a PYMNTS Intelligence report, “The FinTech Innovation Agenda,” a collaboration with Velera, nearly two-thirds of FinTechs are prioritizing mobile feature expansion in the next three years, while refining internal testing and addressing regulatory challenges. The report examines how FinTechs are shaping their innovation strategies to meet growth and operational objectives despite ongoing obstacles.

Innovation Drives Market Expansion

For FinTechs, innovation isn’t just about staying competitive — it’s crucial for brand reputation and market expansion. According to the report, 42% of FinTechs prioritize enhancing their brand image, while 39% aim to enter new markets. These factors outweigh profitability and operational efficiency. Internal product testing, particularly with employees, is a key approach, with 44% of FinTechs using this method more than consumer-based testing (17%). Additionally, 50% of FinTechs build their own tools, while 39% partner with industry consultants to refine their products.

Highlighting internal testing illustrates FinTechs’ desire to control product quality and trigger change. By involving employees early on, they can assess market readiness and address potential issues before reaching customers. With 67% of FinTechs prioritizing mobile capabilities for the next three years, it’s clear that enhancing the mobile experience is key to their strategies for consumer engagement and growth.

The Challenge of Attracting Gen Z

Despite the digital-first nature of Gen Z consumers, FinTechs are somewhat divided on the importance of targeting this demographic. While 62% of FinTechs acknowledge that attracting Gen Z consumers is important for their growth, only 42% deem it “very important.” This contrasts sharply with credit unions (CUs), where 95% of respondents recognize the value of engaging Gen Z. Notably, FinTechs that are reluctant to focus on this generation cite concerns about their relatively low deposits (71%) and low credit utilization rates (53%) as the main barriers.

But the potential long-term benefits of attracting Gen Z — such as their growing deposits and high levels of connectivity — should not be overlooked. Nearly 60% of FinTechs agree that Gen Z represents a key growth market, and 49% see them as highly connected, which could lead to customer expansion. Despite the hesitation of some, the opportunity to build long-term brand loyalty among this digitally native group remains a compelling factor that could shape the future of FinTech consumer engagement strategies.

Regulatory and Technical Hurdles

While FinTechs are committed to change and modernization, they are not without their challenges. Regulatory compliance is the top issue facing the industry, with 34% of respondents identifying it as a significant barrier to bringing new products to market. Additionally, 31% of FinTechs struggle with system integration and complex internal decision-making processes. Few respondents in the report cite a lack of resources or budget as major obstacles, indicating that financial and technological resources are in place to support current and future strategies.

These hurdles highlight the complexity of operating in a heavily regulated and technology-driven environment. As FinTechs look to the future, overcoming these barriers will be critical to ensuring continued growth and successful product launches. A focus on streamlining internal processes, staying ahead of regulatory changes and enhancing collaboration with external partners can help alleviate these ongoing challenges.