Why is management team coaching key for upscaling fintechs?

Today’s VUCA environment presents a unique opportunity to fintechs which have completed later funding drives and are now looking to upscale. Senior managers at those companies should prepare for some big changes to their team, though, and even their own roles.

McKinsey suggests that fintech start-ups have been hit hard by a dramatic drop in funding due to the impact of COVID-19. We’re seeing far fewer start-ups raising enough seed funding, or series A or B funding. For those fortunate enough to be further down the path to profitability, this could be a prime opportunity to upscale, as fewer new competitors are around for the time being.

“At-scale and mature fintechs will get the biggest benefit,” the McKinsey report notes, “as competitors consolidate, weaken, or simply go out of business. The current environment offers a window for successful and profitable fintechs to supplant competitors with targeted offers and competitive pricing at a time when customers are more likely to be open to alternatives.”

To get your business to scale and take advantage of this moment, you’ll likely have to upscale the senior management team to deal with late-stage funding and the additional operational demands of a larger company.

In another analysis focused on the European market, McKinsey notes that “the type of operational knowledge that comes from deep experience launching and exiting from successful start-ups is key to scaling companies through the late stages.” In other words, it’s vital that you maintain institutional and industry knowledge and experience as your business evolves.

However, as both the focus and the everyday operations of the company change, you’ll also need to grow the senior management team. Combining new perspectives and talents with existing knowledge will be vital to adapt, but can lead to clashes and a lack of clarity as the scope of each role changes with the company.

Focused, effective team coaching can help with both of these issues. It will help you identify how you should be adjusting existing roles to face the challenges of an upscaling business, and also support the integration of new members into an existing team.

Clearly defining all management roles is a vital part of the upscaling process, especially at the stage when senior managers may still be fulfilling multiple functions in order to keep the company as lean as possible. Not only will clarifying roles help prevent conflict within the management team, it will also avoid confusion elsewhere in the company.

As the Think Forward Initiative points out, “as your team expands, keeping everyone in the loop will become much more difficult. As a founder, you may also risk missing important information from front-line employees simply because you can’t speak to all of them. To address that, create a transparent organisational structure with clear roles, responsibilities, and reporting lines. That will reduce complexity and help both tenured employees and newcomers to bring their questions and insights to the right people.”

This moment could be a prime opportunity for upscaling fintechs – but only if they realise that, even if their senior management team has been fine so far, they will now need additional leadership support and probably new members. As Toby Moore notes in Upscale: What it takes to scale a startup, by the people who’ve done it, being a good coder doesn’t make you a good manager – a trap too many tech start-ups fall into. Similarly, being an innovative founder doesn’t mean you have the management skills necessary for a larger company.

Smart management teams will recognise this, and ensure that they’re getting specialised coaching to develop their skills and realise where there are gaps they need to fill. Take care of that, and you’ll be ready to continue your company’s growth and take full advantage of the opportunities presented by this moment.