When my former colleague Chris and his team approach their asset management clients, they don’t just push more of their fintech product offerings. They operate like thought partners, bringing insights in areas such as technology trends, competitor activity, and regulatory changes, along with best practices from other industries. According to one investment CFO, “These guys are more up to speed than I am on financial reporting changes.”
The provider, Finstar, had adopted a sector-based client service strategy five years earlier, and it was paying off. The company organized its service teams around sectors (asset management, insurance, pensions, hedge funds) and coordinated other support functions like sales, product, development, and operations around these sectors. This more integrated approach to serving clients allowed it to deepen its business relationships and better align its capabilities to customer needs, leading to larger and more profitable contracts.
Based on research conducted by Ivan Matviak’s company Gardner & Co. on “What is the best way for external advisors to help you add strategic value?”
This is a common refrain in our research. When you assemble comprehensive industry-focused insights from across your organization — through effective cross-silo collaboration (what we call “smarter collaboration”) — you position yourself as a valuable thought partner, not a mere vendor.
But developing and executing a sector approach often isn’t easy. In this article, we will explore top challenges to a sector approach and several ways for companies — and fintechs in particular — to overcome them.
Top Barriers to Sector-Focused Collaboration
Siloed and functionalized organizational structures, misaligned incentive structures, and a lack of sector-specific knowledge across groups are some of the typical barriers to effective collaboration. The first two issues can make it unclear who “owns” the client, resulting in turf wars or gaps in service. As for the lack of sector-specific knowledge, sales and service teams shouldn’t be the only ones with industry-focused insights. This deep knowledge must extend to other parts of the organization, including product development (to make valuable products for the target sectors), marketing (to speak in the client’s language), and development (to build capabilities that support nuanced client needs).
First Step: Build a Sector Strategy
Fintechs need to develop a clear sector-based engagement strategy that considers client needs, priority segments, and supporting structures. This starts with identifying possible sector market segments and their characteristics, including:
- Total available and addressable market segments
- Projected growth rates
- Competitive landscape
These metrics can help companies determine their focus. As a rule of thumb, we recommend selecting between three and seven sectors; any more can be unwieldy. Once the sectors have been chosen, companies need to ensure that the rest of the organization is aligned around them in order to track, reward, and encourage sector-based performance. Areas that often require some changes are:
- Reporting and analysis (client data, sales, profitability, etc.)
- Performance management and incentives
- Budgets
Next Step: Empower Leadership
Your senior leaders need to set the tone from the top and continually endorse the sector strategy, both internally and externally. They also need to actively clear hurdles, allocate and align resources to sectors, and educate themselves on how to speak with customers.
Within the leadership team, you need a sector champion at the highest level of your company. You then need leaders to drive each sector. The primary imperative is to choose sector heads who are respected, capable, and passionate about their sectors — not those who simply want a title. This isn’t necessarily the person who generates the most sales. Instead, it might be a thought leader who can be immediately visible and credible in revamped marketing efforts.
Final Step: Strive for Sector 1.0, With Sector 2.0 in Mind
Sector 1.0 is achieved when fintech companies successfully collaborate across functions — sales, marketing, product management, client services, IT, operations, and even finance and HR — to develop differentiating sector-focused insights and solutions.
Sector 2.0 is attained when they integrate expertise from multiple sectors to generate results. For example, a fintech company could leverage its expertise from across online retail, brick-and-mortar retail, and government to develop unprecedented anti-fraud technology.
A migration toward a fully sector-based approach grounded in cross-silo collaboration requires considerable change. While this article provides several ideas for making this transition, more strategies and details can be found in chapter seven of Smarter Collaboration: A New Approach to Breaking Down Barriers and Transforming Work: “Collaborating through a Sector Lens.”
Also, if you’ve had success with a sector approach, I’d love to hear from you. Feel free to email me at ivan@gardnerandco.co.
Ivan Matviak C91 G98 WG98 is chief executive officer at Smarter Collaboration Int’l, co-author of Smarter Collaboration: A New Approach to Breaking Down Barriers and Transforming Work, and co-founder of Gardner & Co. Previously, he was executive vice president at Clearwater Analytics, a software-as-a-service fintech company, and an EVP at State Street Corporation.
