social+ payments: why fintechs need social features

The Rise of Social+ Companies

Businesses focused on community are increasingly challenging traditional models. They are attracting customers by offering not just products, but also a sense of connection and shared identity.

But what defines a Social+ company? It’s an organization where social interaction is fundamentally built into the product itself.

Core Characteristics of Social+ Businesses

Essentially, the product loses its core value if the social aspect is removed. This integration is crucial to its function and appeal.

Numerous examples demonstrate this trend across various sectors.

• Gaming: Platforms like Fortnite thrive on player interaction.
• Fitness: Strava and Peloton leverage community for motivation and engagement.
• Commerce: Pinduoduo utilizes social sharing to drive sales.
• Audio: Clubhouse is entirely based on real-time social audio conversations.

As highlighted by Andreessen Horowitz, the most effective consumer products are those that are inherently social in nature.

This suggests a shift in consumer expectations, where products are no longer solely evaluated on functionality, but also on their ability to foster belonging and connection.

The Advantages of Social+ Companies

Social+ products are experiencing widespread adoption due to their successful integration of community features with core functionality. Users establish genuine connections and participate in discussions that enhance their objectives.

Whether focused on securing discounts or expanding their financial holdings, social+ products empower users to acquire knowledge, find encouragement, achieve recognition, cultivate friendships, and experience a sense of belonging.

Businesses that structure their operations around social+ products benefit in several key areas:

Expansion

When social interaction is fundamental to a product’s operation, users frequently contribute to growth organically, extending invitations to their network of friends and relatives to participate in the community.

Individuals within highly active communities are motivated and energized by their interactions, and this enthusiasm naturally leads to word-of-mouth promotion. Being part of a community fosters a strong sense of connection, significantly impacting growth potential.

Customer Loyalty

The relationships users have with brands are crucial. These connections ultimately dictate whether customers remain loyal or seek alternatives, even if those alternatives offer similar services at a lower cost.

Providing access to a relatable community and valuable resources increases customer loyalty. Social+ allows you to integrate social interaction directly into your product, controlling the conversation and cultivating a brand-focused community.

Without these integrated communities, users often turn to platforms like Reddit or WhatsApp to discuss products and compare competitors.

Leveraging User Creativity

User-generated content (UGC) is essential for any social+ product, boosting engagement and strengthening connections between users.

UGC allows companies to tap into the creativity of their user base, reducing the need for extensive content creation. Furthermore, authentic UGC, such as screenshots or memes, enhances product credibility more effectively than traditional marketing campaigns.

Data-Driven Customization

Integrating social features into your fintech product provides greater control over user data, simplifying the process of gathering feedback, testing new functionalities, and identifying successful features.

An established and active community serves as a valuable source of customer insights, enabling personalized experiences. This captive audience can provide invaluable feedback.

Competitive Advantages

A substantial and expanding community, where the community’s strength is integral to the app’s value, creates network effects that competitors cannot easily replicate through feature additions alone.

While features can be copied, a thriving community is a lasting asset.

The Expanding Social Dimension of Fintech

The advantages inherent in social integration are prompting innovation across numerous sectors, even those traditionally characterized by strict regulation and resistance to change. A surge of “social+” innovation is particularly evident within the financial technology (fintech) landscape.

The recent prominence of WallStreetBets serves as a compelling illustration of this trend. Previously a sensitive subject, the open exchange of financial information is now increasingly prevalent.

Individuals are openly discussing their financial situations across various online platforms. This includes Twitter users voicing concerns about student loan debt, Instagram users and bloggers sharing income details, and Microsoft employees leveraging internal platforms like Blind to negotiate salaries more effectively.

Furthermore, anonymous professional networks are fostering candid conversations on a wide range of topics. Day traders are showcasing their investment successes and cryptocurrency gains on Reddit, demonstrating a rapidly evolving norm of online financial transparency.

Venmo, a P2P payments application, pioneered this shift by incorporating features like notes and emojis into transactions. This transformed the often-uncomfortable act of requesting repayment into a more engaging and social experience.

More recently, newer trading applications, such as Robinhood, have challenged established market norms. They’ve democratized investing by eliminating broker fees, making the stock market more accessible to a broader audience.

However, many existing applications lack the guidance necessary for novice investors and the supportive community needed to navigate the complexities of the market. This absence creates a significant opportunity for innovation.

The success of WallStreetBets underscores a critical point: mere transactional functionality is insufficient. Users actively seek readily available information from peers and require reassurance during market fluctuations.

The sense of camaraderie and shared experiences, often expressed through online memes, are also highly valued. If a product doesn’t natively integrate a community aspect, users will seek it elsewhere.

Companies like Public and Commonstock are responding to this demand by developing social+ fintech products. These platforms enable users to follow each other, share investment insights, participate in community forums, and engage in direct messaging.

StokFella, a South African fintech company, has developed a uniquely social-first lending product. It operates as an online Rotating Savings and Credit Association (ROSCA).

Within a StokFella ROSCA, community members contribute a predetermined monthly amount to a collective fund, with a different member receiving the total sum each month.

Developing a Socially Integrated Financial Product

A crucial consideration when developing a social+ product is understanding its core nature: it’s a fusion of social interaction with commerce or finance, rather than simply adding social elements as an afterthought.

Merely appending a social feature to an existing financial product as a marketing tactic will likely prove ineffective. Genuine social integration must be fundamental to the product’s design. This necessitates equipping users with robust tools for genuine peer-to-peer interaction.

These tools should include functionalities such as in-app content creation, the ability to follow other users, dynamic activity feeds, dedicated forums, and both individual and group messaging options.

Furthermore, features like voice and video calling, competitive leaderboards, and rewards systems driven by network participation should be integrated in conjunction with core financial transactions.

While this may appear to demand extensive redevelopment of an existing application, modern APIs simplify the process of incorporating these social features. However, it’s important to anticipate challenges like community moderation when selecting your technology stack.

Social+ products are experiencing increasing adoption, with companies such as Pinduoduo, Strava, and Public demonstrating successful implementations.

This trend towards social integration is expected to continue, and the financial technology sector is no exception. Fortunately, the social+finance movement is still relatively new, presenting opportunities for early adopters to establish a competitive edge.

The Rise of Social Finance

• The key is authentic peer-to-peer engagement.
• Social features must be integral, not superficial.
• APIs facilitate rapid implementation of new functionalities.
• Community moderation is a critical consideration.

The potential for growth within the social+finance space remains significant, making it an opportune time for innovation and market entry.