BETA
This is a BETA experience. You may opt-out by clicking here

More From Forbes

Edit Story

Trust Me If You Can: Why Reputation Capital Is A Must For Fintech Startups In This Economic Downturn

Valentina Drofa, Founder and CEO at fintech PR consultancy Drofa Comms.

There is no need to remind everyone who cares as deeply as I do about fintech of the industry’s state in light of the latest news. But for those who are far away from fintech (yet decided to click on this article), I will give you cold statistics. In Q3 2022, fintech startups raised 40% less than in Q2. In terms of VC funding, fintech is the third worst performer, with a 62% fall year-over-year.

It means that now more than ever, fintech market players must prioritize customers' trust and relationships with stakeholders to build robust credibility in the face of challenges. This credibility will determine how easily your company can attract investments and maintain its liquidity. And there is no better way to ensure your company can stand out against the economic downturn than by investing in your reputation capital.

What Reputation Capital Is (And How To Earn It)

First, let’s define reputation capital. This term primarily represents the trust in a company and its leaders and the value of their brand, both corporate and personal, in the eyes of the market. CEOs and founders can easily harm the company they embody with questionable behavior, rash decisions and actions, as the reputation capital directly affects the company's brand.

Reputation capital can be accumulated from your customers, investors, employees, partners—everyone who has heard about your company. Simply put, it is the first thought people have when they hear your brand's name. Naturally, it is better for you if that thought is a positive one.

Reputation capital may be an intangible asset by its nature but do not underestimate the value it can bring to a company. It is a crucial factor influencing your business' success in the long run, as it helps acquire new customers and retain existing ones when things get tough.

As a professional with more than 15 years in fintech and PR, I have seen how a brand’s reputation can lift you up and just as easily cause you to crash down. Take the 2007-2008 global financial crisis. Unethical lending practices and extreme and irresponsible risk-taking led to the burst of the U.S. housing bubble and, eventually, the recession.

The public perception was that rich businesspersons were getting special treatment while ordinary people were not. In the public eye, what industry leaders lacked the most was transparency, admitting mistakes, and above all, compassion for people’s suffering. This “crisis of trust” led to a loss of confidence in financial institutions, and we should learn from the mistakes of the past and avoid repeating them in the fintech realm today.

Thus, in a crisis, the least companies can do is show their human faces, address the hardships their audience is experiencing, engage in corporate responsibility initiatives and show ethical leadership. Such times give the company's CEO an excellent opportunity to supercharge the brand's reputation.

The Role Of A Business Leader's Personal Brand

A decade or so ago, business leaders and CEOs were expected just to lead companies. Today, they find themselves leading economic and political systems. Take Elon Musk, who can move entire markets with a single tweet. Like it or not, this is the reality we work in—even more so in the fintech sphere.

Naturally, writing a few posts about random topics in your company blog is not enough to establish yourself as a credible, trusted thought leader. You need to maintain a consistent effort to achieve success.

First, find the subjects and topics of your expertise and stick to them. They have to be relevant to your industry and what your business is doing. If you want to become a fintech thought leader as a neobank's founder, save your cooking mastery for another occasion.

Do not be afraid to share an opinion that differs from others; standing out from the crowd is a great edge if you know well what you are talking about. Although, I would advise being nuanced in this regard, as saying something highly controversial could easily diminish the reputation you have been trying to build for months or even years.

Despite their expertise, thought leaders are always willing to learn more from other influencers and media outlets or attend conferences that keep them in the loop with the latest market trends and help meet the right people. International fintech conferences are a significant part of my work schedule, so I plan them ahead of time and advise you to do so, too.

Attending specialized events will help you declare yourself a prominent figure in the fintech world and even get media coverage as a panel speaker. The fintech market is even faster and more disruptive than any other hi-tech industry, with daily game-changing innovations, so do not miss a chance to use conferences as a working tool to get your name out there.

How Reputation Capital Can Assist Fintech

Even in the face of the recent downturn, scandals and layoffs, I believe the fintech industry has a promising future. Some predict that the global financial technology market will grow by 13%, reaching $225 billion by 2027.

I would even argue that one of the main reasons the industry has a bright future lies in the nature of fintech: It is more lively and filled with constant innovations. And its leaders are more adaptable than in many other conservative industries.

In the meantime, as this sector rises back to its feet, the reputation of companies that stand tall in the current harsh times will play a major role in fintech's development. A market built by strong firms with expert leaders that value reputation capital will become a crucial factor in improving the industry's overall image and helping it grow toward a better future.


Forbes Business Council is the foremost growth and networking organization for business owners and leaders. Do I qualify?


Follow me on LinkedInCheck out my website