Localization strategy
Recent years have brought sweeping changes to the financial service industry. Technological advances, economic challenges, and world events have all made their mark on the industry, providing opportunities for fintech companies to offer alternatives to traditional banking.
Compared to brick-and-mortar banks, it’s easier in some ways for fintech companies to expand beyond the borders of their home countries. For instance, they don’t need to rely on physical locations with dedicated employees to serve their customers.
Nevertheless, fintech companies still face low trust due to low awareness among consumers worldwide. Adapting the customer experience (CX) in each target market presents some unique challenges, where newcomers might find it difficult to gain a competitive advantage.
A strategic focus on localization can help your fintech business boost consumer trust and drive revenue from around the globe—read on to find out why and how.
The fintech industry has seen incredible growth over the last decade, and the pace of that growth continues to quicken. In 2021 alone, $102B was invested into fintech globally—a 183% increase from 2020.
Offering everything from money transfers to investment accounts, fintech companies have begun displacing some traditional actors in finance, especially among younger consumers, and the need for financial services is something of a global constant. The COVID-19 pandemic even served as a springboard for some, with more consumers of financial services looking for online alternatives to in-person bank visits.
With low levels of consumer awareness of fintech services globally, gaining and retaining customers isn’t always easy. Adoption rates vary wildly from one country to the next: While 87% of Chinese consumers have begun using fintech services, only 34% have in nearby Japan. In fact, Japan is known for its reluctance to replace certain kinds of “good-enough” technology, and it still uses fax machines extensively.
Consumers in markets with low adoption rates may be skeptical of fintech companies, so gaining their trust is important—and localization is key to doing that. Localizing the customer experience (CX) demonstrates a commitment to doing business with consumers in a particular market on their terms. Localized web or mobile apps, marketing collateral, and support content help consumers feel more confident in choosing a service provider. On the contrary, a staggering 40% of consumers will not even consider buying a product or service that isn’t available in their own language.
In this section, we’ll take a closer look at the biggest localization challenges for fintech companies that want to expand the global footprint of their business: local regulations, cultural differences, and brand consistency.
The exact nature of these challenges is different for every business, but being aware of them now will help you steer clear of trouble down the road. As you read about each challenge, think about ways it could affect your business.
Localization tends to be more complex in the finance industry than in industries like travel and retail—and not only for linguistic reasons. Companies offering financial services are usually subject to local regulations that other companies may not be.
For example, German-based N26 got its start in fintech offering prepaid payment cards for use by teenagers. As it expanded its offerings to include digital banking services for customers of all ages, it also expanded its presence—first to other Eurozone countries and later to the United States.
Nevertheless, with every US state being its own regulatory environment, N26’s expansion turned out to be quite challenging in contrast to the homogeneity of the Eurozone. Faced with the daunting prospect of maintaining offerings tailored to each state, N26 ultimately decided to leave the US market and focus even more on its strong customer experience in Europe.
N26’s example makes it obvious that local regulations can significantly vary from place to place. This can make for an especially unpleasant surprise (and legal trouble) if some aspects of your home country’s regulations are less strict than those of your target market.
Cultural differences can complicate localization for fintech companies. For instance, some cultures still prefer cash to cards and digital wallets, so it may be difficult to convince consumers from these cultures to use digital offerings. Japan and its love for fax machines, mentioned earlier in this article, are a good example of this type of issue.
The role of finances in interpersonal relationships is another factor that may come into play: US parents often save money to pay for their children to attend a university, while adult children in Latin American countries are often expected to provide for some of their parents’ needs.
Some companies have enlisted the help of local marketing agencies and partnered with local businesses in target markets to overcome hesitance among consumers. Co-branded offerings can be useful in this regard, as consumers are naturally less skeptical of products and services associated with familiar, trusted brands.
Some of the challenges in this area are common to all companies expanding into new markets, while some are specific to the financial industry. Among the more generally applicable issues is crafting the right tone.
Just because consumers in one market respond well to content in a casual, friendly tone doesn’t mean consumers around the world will. Languages also have different “palettes” of ways to express formality, politeness, and respect, such as using different pronouns and verb forms.
On the other hand, consumers’ levels of financial literacy pose a challenge that is unique to the financial industry. Consumers in certain countries may require simplified messaging or special explanatory content to help them understand financial concepts they aren’t familiar with.
After considering the challenges that your fintech company might face in localizing its offerings for a new target market, you can conduct market research and create an informed localization strategy that will give your company the best chance of success in a new market.
In answering those questions, be careful not to make misguided assumptions. For example, Portuguese content created for Brazil cannot simply be reused in Portugal, and Mandarin Chinese content created for mainland China cannot be reused in Taiwan.
Part of developing a localization strategy is determining how to localize different kinds of content. Sensitive or highly visible content, like legal documents or an app’s user interface, requires the attention of specialists; the least visible and least sensitive content, like internal emails, can be handled by machine translation. Non-specialist translators can handle content in between these extremes, potentially also leveraging machine translation to speed up the process for simpler content.
Partnering with third-party providers to support your localization process is another key element of your global expansion. You want to build relationships with as many experts as possible early on in the process to ensure a steady localization workflow as you grow.
Some examples of third-party partners you may want to consider are:
By relying on a third-party provider to manage parts of your localization workflow, you can focus on fulfilling the core customer-experience duties that will drive your business forward while minimizing your risk in terms of budgeting and execution.
When you’re ready to localize your fintech product, a localization solution can help you completely automate the localization workflow and reduce costs without sacrificing quality. Phrase, an all-in-one translation and localization solution, has been supporting the global expansion of fintech companies by combining well-established translation technology such as translation memory and term bases with state-of-the-art machine translation capabilities.
To help you solve the challenge of fintech at a global scale, Phrase will enable you to:
Last updated on March 7, 2023.
