The Pitfalls of Fintech PR: An Analysis of Failed Campaigns in Small Companies

In the fast-evolving world of fintech, where innovation and customer trust are paramount, effective public relations (PR) can make or break a company’s chances of success. Unfortunately, while many fintech startups enjoy the high rewards of strategic PR, some fall short, struggling to convey their value, misreading their target audience, or failing to adapt to changing circumstances. These failures, though often painful, offer valuable lessons for others in the industry. This op-ed will examine a few examples of failed fintech PR campaigns from small companies, dissect the causes behind their downfall, and offer insights into how future fintech players can avoid similar mistakes.

The Fintech Landscape: A High Stakes Game

The fintech industry, encompassing everything from digital payments to cryptocurrency, wealth management tools, and lending platforms, has seen explosive growth in recent years. According to a report from KPMG, fintech funding globally reached $210 billion in 2020 alone. This surge in investment means that competition is fiercer than ever, and even small fintech companies can find themselves facing the scrutiny of venture capitalists, customers, and the media.

In such a high-stakes environment, PR is not just about creating buzz; it’s about managing perceptions, shaping narratives, and most importantly, fostering trust. For small fintech companies, gaining that trust is often one of the most difficult and crucial tasks. Trust issues arise more quickly in the fintech space than in many other industries because money is at stake. Thus, the consequences of a failed PR campaign can be catastrophic.

To understand what makes PR campaigns fail in this sector, let’s analyze some of the key missteps small fintech companies have made, and how their failures impacted their brands.

Case Study 1: The Unclear Message – Betterment’s Struggle to Define its Brand

Betterment, an online investment platform, began with a compelling value proposition: making wealth management more accessible to the average person. Through automated investing powered by algorithms, Betterment sought to democratize financial services, offering a low-cost alternative to traditional wealth management. However, despite its potential, Betterment’s early PR campaigns struggled with clarity and consistency.

The company’s messaging was often inconsistent. While some campaigns emphasized Betterment’s low-cost fees, others focused on the idea of an emotional connection to one’s financial future. This lack of focus in their PR resulted in mixed messages that failed to resonate with a cohesive audience.

Why it Failed:

• Unclear Value Proposition: In a competitive space like fintech, where clarity is crucial, Betterment’s PR campaigns often missed the mark by not making its value proposition clear enough. While investors value low fees and returns, they also need to understand exactly how the company’s offerings align with their personal financial goals.
• Audience Confusion: The confusion about Betterment’s core message left potential customers unsure of the platform’s actual value. With fintech, you don’t just sell a product or service—you sell trust. When the messaging is unclear, trust can quickly erode.

Lessons Learned:

• For small fintech companies, PR efforts should focus on distilling the message into something simple and memorable. Is your company offering a superior product or an innovative technology? Or is it about making customers’ financial lives easier? A clear value proposition builds brand trust and keeps customers engaged.
• Avoid trying to cater to too many customer types at once. Different segments (e.g., millennials versus older investors) require targeted, distinct messaging.

Case Study 2: Over-Promising and Under-Delivering – LendingClub’s PR Crisis

LendingClub, a leading peer-to-peer lending platform, initially received substantial media attention for its disruptive business model, which promised to streamline the lending process and offer borrowers better rates than traditional banks. However, LendingClub’s ambitious public relations campaigns became a double-edged sword when the company over-promised its future growth potential and failed to meet expectations.

When the company went public in 2014, LendingClub’s PR efforts centered around their potential to disrupt the traditional banking system. The messaging implied that they would quickly become a major player in the financial industry, but by 2016, the company found itself embroiled in a scandal involving fraudulent loans and internal management issues.

Why it Failed:

• Excessive Hype: LendingClub’s PR campaigns positioned the company as an unstoppable force. By setting high expectations about its ability to disrupt the financial world, the company failed to take into account the operational challenges it would face as it scaled.
• Over-Promising: The company’s messaging painted an overly rosy picture, which led to significant backlash when it became apparent that LendingClub was not living up to the high expectations it set.
• Trust Erosion: The failure to live up to PR promises, particularly around its role in the lending ecosystem, caused customers, investors, and media outlets to lose trust in the company. The credibility of its PR campaigns took a major hit.

Lessons Learned:

• Over-promising and under-delivering is a dangerous PR strategy for fintech companies. While optimism and innovation are essential components of any fintech startup, companies must be cautious about making grandiose claims that can backfire if they aren’t able to deliver.
• It’s better to manage expectations in a way that emphasizes long-term goals and sustainability rather than an immediate revolution in the industry.

Case Study 3: Failure to Understand Regulatory Challenges – Wirecard’s Collapse

Wirecard was once a darling of the fintech world. It offered payment processing services for e-commerce merchants and quickly became a standout fintech player in Europe. The company’s PR campaigns highlighted its innovative technology and rapid growth, positioning it as a fintech leader. However, Wirecard’s PR efforts failed to address the underlying issues that would eventually contribute to its downfall.

The company’s aggressive PR messaging, centered on international expansion and market domination, made little mention of the looming regulatory scrutiny surrounding its business model. The fintech world was rocked when, in 2020, it was revealed that Wirecard had inflated its financial records, leading to one of the largest corporate fraud scandals in European history.

Why it Failed:

• Lack of Transparency: Wirecard’s PR failed to address serious concerns about its financial practices. The company’s growth was heavily promoted, but the fundamental issues around its accounting practices were either ignored or downplayed by the PR team.
• Ignoring Regulatory Risks: Wirecard’s PR messaging downplayed the complexity of operating in a heavily regulated space like financial services. As a result, it failed to address potential risks or provide customers with enough transparency about how their funds were being handled.
• Deceptive Messaging: The messaging was so aggressive in touting the company’s growth that it blinded stakeholders to the underlying risks. When these risks were exposed, the PR machine could not recover the company’s tarnished reputation.

Lessons Learned:

• Fintech PR must acknowledge the regulatory landscape and address any risks head-on. As fintech companies often operate in highly regulated environments, being transparent about potential risks is crucial to building trust.
• Avoid “over-claiming” and ensure that the PR team is aligned with financial and regulatory realities. Being overly promotional in a heavily scrutinized sector can result in severe backlash when things go wrong.

Case Study 4: Inadequate Crisis Communication – Revolut’s PR Missteps

Revolut, a British fintech startup that offers banking services and currency exchange, is one of the fastest-growing fintech companies in the world. However, the company has faced significant PR issues related to its handling of crisis communications. In 2019, Revolut faced a series of customer service failures, which included reports of customer accounts being frozen without warning. These issues became public, and the company’s PR response was slow and ineffective.

Despite the urgency of the situation, Revolut’s initial PR response was delayed and lacked transparency. Instead of proactively addressing the complaints and offering clear solutions, the company initially issued vague statements that were seen as dismissive by the public.

Why it Failed:

• Slow Crisis Response: Revolut’s PR team failed to react swiftly to the customer service issues, which allowed the narrative to spiral out of control. Social media platforms became a space for angry customers to voice their frustrations.
• Lack of Transparency: Revolut’s reluctance to provide clear answers about what had happened and what steps would be taken to rectify the situation caused further dissatisfaction.
• Missed Opportunity for Empathy: During a crisis, companies should strive to connect with customers on an emotional level, demonstrating that they care. Revolut missed the chance to demonstrate empathy in its communication, which further alienated its user base.

Lessons Learned:

• A slow response in times of crisis can irreparably damage a fintech company’s reputation. Speed and transparency are critical for maintaining trust during difficult times.
• A strong crisis communication plan should be in place, with well-defined steps for how to handle both operational and reputational crises. Proactive, empathetic communication is essential in these moments.

Key Takeaways for Fintech PR:

• Clarity Over Complexity: Fintech is inherently complex, but PR campaigns should aim to simplify the message and present the product or service in an accessible way. A confusing or convoluted message can turn off potential customers.
• Manage Expectations: Fintech companies should avoid overhyping their products or services. PR should be aligned with realistic expectations that allow room for growth, avoiding the risks of disillusionment when goals aren’t met.
• Transparency and Trustworthiness: Given the financial nature of the industry, fintech PR campaigns must prioritize transparency. Whether it’s dealing with regulatory issues or customer service problems, being upfront is crucial to maintaining brand trust.
• Crisis Management: The fintech sector operates in a highly competitive and regulated environment, where things can go wrong very quickly. Having a clear and timely crisis communication plan in place is vital to recover from any PR mishaps.

For small fintech companies, PR is not just about creating excitement—it’s about cultivating trust and managing a brand’s reputation. Failed PR campaigns, like those seen with Betterment, LendingClub, Wirecard, and Revolut, highlight the dangers of over-promising, lack of transparency, and poor crisis management. In a space where trust is critical, fintech companies must ensure their PR campaigns are clear, honest, and responsive to both customer needs and the regulatory environment.

By learning from the mistakes of others and prioritizing transparency, clear messaging, and effective crisis management, fintech companies can position themselves for long-term success in a crowded, fast-moving industry.