Studying the properties and composition that make up the FinTech ecosystem
Welcome to this week’s industry analysis with the FinTech Chemist. While I may not be literally mixing solutions and preparing reagents, I am studying and testing out the latest and greatest in FinTech. My most recent experiment has me focusing on society’s obsession with celebrities and influencer marketing. It is a fascinating phenomenon, and no industry has been spared.
Think of it like this: some elements are just meant to go together, like hydrogen and oxygen. Not to mention, all living things need water to survive! (If you don’t need water, you might be an alien, but that is for another article). However, what happens when opposites attract? What kind of chemical reaction occurs when you mix celebrities, social media, and FinTech? You get a muddled mess of question marks. Is it genuinely effective to have celebrities promote a FinTech company or brand?
Based on my research and general observations, here is what I can formulate: social media is ingrained in our everyday lives, and we are constantly inundated with celebrities promoting fashion, beauty, and lifestyle brands. Ashton Kutcher, Paris Hilton, Bono – these are just a handful of celebrities who have cashed in on FinTech. It has now become paramount that FinTech companies position themselves as brands so they can compete in a crowded marketplace. Most FinTech companies pride themselves on being innovative, which is why it is so surprising that FinTech companies are approaching marketing and advertising in a traditional manner. Take the partnership between Klarna and Snoop Dogg, for example. The American rapper is a minority shareholder in the company, which offers buy-now-pay-later services at 100,000 retailers in Europe and across the US, according to *Forbes. *With a valuation of over $2.5 billion and a megastar to endorse you, it certainly seems like a great strategy to promote a new brand. However, will the buzz fizzle out once a competitor comes up with a newer and flashier campaign with some other celebrity?
Here is where we get to the chemical reaction part, and Madhvi Mavadiya, a contributor to *Forbes, *said it best, “As brands target advocates who have a big social media following rather than industry experts, what this does not do is establish is a longstanding customer relationship. Once something has finished trending, the consumer moves on to the next brand endorsement, sometimes within seconds.”
Here come the regulators! The influence celebrities have on our lives – thanks to social media making them more accessible – is staggering. With fame, comes significant warnings. Celebrity endorsements have now triggered the US Securities and Exchange Commission. In 2017, the SEC had to issue a statement to be cautious of celebrities promoting investments and FinTech products, especially ICOs.
However, there are two sides to every story. Akon, a Grammy-nominated artist-turned-philanthropist, is a great case study of celebrity influence gone right. In 2018, he announced AKoin, a mobile-friendly cryptocurrency that is aimed at bolstering the African ecosystem.
According to an article in Newsweek, “Planned amenities of the AKoin ecosystem include a digital wallet for safe storage and payment of AKoin transactions, as well as exchanges of traditional fiat money, other cryptocurrencies, and even prepaid cellular minutes (which, in Africa, are highly valuable). It will enable users to build up credit and participate in microloans, further spurring entrepreneurial potential.”
This initiative will ultimately enable the people of Africa to be less dependent on their government, which has a long history of being corrupt. “I think that blockchain and crypto could be the savior for Africa in many ways,” Akon has said, “because it brings the power back to the people.”
As this societal experiment plays out, it is clear that we still have a lot to learn. Now, onto my next scientific… I mean FinTech hypothesis adventure. Also, as always, remember to take your vitamins!