Revolutionize Your Fintech Business: The Top 7 KPI Metrics to Track

Welcome to the world of Fintech, where innovation and technology are changing the face of finance. As a seasoned entrepreneur, I know how crucial it is to track Key Performance Indicators (KPIs) to ensure success. In this article, I will share with you the top seven Fintech KPI metrics that you need to track and calculate.

• Customer satisfaction level: Happy customers are core to any business, and Fintech is no exception. A satisfied customer is more likely to stay loyal to your brand, spend more, and generate positive word of mouth.
• Number of new clients: The growth of your customer base is a testament to the attractiveness of your Fintech product or service. Increasing the number of new clients is a typical goal for most Fintech companies.
• Average revenue per client: It is critical to know how much revenue each customer generates to determine the profitability of your business. By calculating this metric, you can adjust your pricing model and product strategy based on your target audience.

I will also share with you three more core KPIs that you need to track to succeed in Fintech. Keep reading and take notes on how to improve these metrics effectively.

• Client retention rate: It is less expensive to hold on to existing customers than to acquire new ones. A high client retention rate indicates customer satisfaction, engagement, and loyalty to your brand.
• Number of financial products sold per client: Cross-selling and upselling are effective strategies to increase the lifetime value of your clients. If you offer various financial products and services, tracking this metric can help you to promote other relevant products to your customers.
• Time spent with each client: It is essential to manage your time efficiently in Fintech. Knowing how much time you and your team spend with clients can improve your service delivery and help to prevent unplanned delays.

1. Customer satisfaction level

Customer satisfaction level is a key performance indicator that measures how satisfied customers are with your fintech product or service.

Definition

Customer satisfaction level refers to the overall level of satisfaction that a customer has with your fintech product or service.

Use Case

The use case for customer satisfaction level is simple - it helps fintech companies to understand how satisfied their customers are with their products or services. This knowledge can be used to improve products and services or to identify issues that need to be addressed.

How To Calculate KPI

The customer satisfaction level KPI can be calculated using the following formula:

Calculation Example

For example, if you survey 100 customers and 80 of them report that they are satisfied with your fintech product or service, then the customer satisfaction level KPI would be:

KPI Advantages

• Provides a direct measure of how satisfied customers are with your fintech product or service
• Can be used to improve products and services based on customer feedback
• Can help to identify issues that need to be addressed

KPI Disadvantages

• Does not provide insight into why customers are satisfied or dissatisfied
• May not reflect the opinions of all customers
• May be influenced by factors outside of your control

KPI Industry Benchmarks for Customer satisfaction level

The industry benchmark for customer satisfaction level varies depending on the specific fintech industry. However, a generally accepted benchmark is a customer satisfaction level score of 80% or above.

Number of new clients

Definition

The number of new clients is a key performance indicator that measures the number of new clients acquired within a specific period of time.

Use Case

This metric is particularly important in the fintech industry as it provides a clear indication of the company's growth and success in acquiring new customers. The number of new clients also helps determine if the company's marketing and sales efforts are effective.

How To Calculate KPI

To calculate the number of new clients, use the following formula:

Calculation Example

For example, if you started the quarter with 500 clients and ended with 750, then your number of new clients would be:

KPI Advantages

• Provides insight into the effectiveness of marketing and sales efforts.
• Helps measure the company's growth and success in acquiring new customers.
• Can help identify trends over time and inform business development strategy.

KPI Disadvantages

• Does not take into account the quality of new clients.
• May not always be a reliable indicator of growth as client churn can offset new client acquisition.
• May be influenced by external factors such as market conditions or competitor activity.

KPI Industry Benchmarks

Industry benchmarks for the number of new clients vary widely depending on the specific fintech sector. However, in general, a growth rate of at least 10% per quarter is considered strong in the fintech industry.

3. Average Revenue per Client

Definition

Average revenue per client (ARPC) measures the average revenue generated by a single client or customer in a specific period. ARPC is used to understand how much revenue a company is generating from each client, on average.

Use Case

ARPC is an important metric for fintech companies that offer subscription-based services or charge clients fees for using their services. By tracking ARPC, companies can understand how their clients are contributing to their overall revenue and identify potential areas for growth.

How to Calculate KPI

Calculation Example

Company XYZ generated $100,000 in revenue from 500 clients in the last quarter.

KPI Advantages

• ARPC provides insight into client behavior and spending patterns
• ARPC can be used to identify client segments that are the most profitable
• ARPC can help identify opportunities for cross-selling or upselling to existing clients

KPI Disadvantages

• ARPC can be misleading if there is a wide variance in revenue generated by different clients
• ARPC does not account for differences in pricing or service levels
• ARPC does not consider profit margins or acquisition costs

KPI Industry Benchmarks

The ARPC for fintech companies can vary greatly depending on the industry and type of service offered. According to a study by McKinsey & Company, the ARPC for financial advisors ranges from $1,500 to $2,000 per year, while the ARPC for robo-advisors ranges from $100 to $500 per year.

4. Client retention rate

Definition

Client retention rate is a key performance indicator that measures the percentage of customers or clients who continue to do business with your company over a set period of time. It is an important metric for measuring customer loyalty and satisfaction.

Use Case

Client retention rate is useful for identifying areas of improvement in your business, as well as for evaluating the effectiveness of your customer retention strategies. By tracking this metric, you can identify which customers are at risk of churning and take steps to address their concerns before it's too late.

How To Calculate KPI

To calculate client retention rate, you need to divide the number of customers at the end of a given period by the number of customers at the beginning of that period, and then multiply by 100.

Calculation Example

Let's say you had 1,000 customers at the beginning of the quarter, and at the end of the quarter, you still had 950 of those customers. Your client retention rate for that quarter would be:

KPI Advantages

• Identifies which customers are loyal to your business
• Helps you assess the effectiveness of your customer retention strategies
• Can identify areas of improvement in your business

KPI Disadvantages

• Does not take into account new customers gained during the period
• May be skewed by one-time events, such as a major promotion or a change in company policy

KPI Industry Benchmarks

The client retention rate varies by industry. However, according to a survey conducted by Harvard Business Review, a 5% increase in customer retention can boost profits by 25% to 95%.

5. Number of financial products sold per client

Definition

Number of financial products sold per client is the metric that measures the total number of financial products and services that a company sells to a single customer. It is an important measure to understand the cross-selling and up-selling efficiency of a company.

Use Case

The use case of this KPI is to assess a company's ability to sell additional products to its existing customers, which can lead to increased revenue and profitability, and higher customer lifetime value. By tracking this metric, you can identify and analyze the behavior of your customers, and design better sales strategies.

How To Calculate KPI

You can calculate the Number of Financial Products Sold per Client using the following formula:

Calculation Example

Let's say your company sells five different financial products: savings account, credit card, personal loan, mortgage, and insurance. In a given month, you sold 20 savings accounts, 10 credit cards, 5 personal loans, 2 mortgages, and 8 insurance policies to a total of 100 customers.

Using the formula, your calculation for Number of Financial Products Sold per Client would be:

So, on average, your company sold 0.45 financial products to each of its customers in that month.

KPI Advantages

• Helps identify cross-selling and up-selling opportunities.
• Highlights which products are popular among customers.
• Can increase customer loyalty as satisfied customers are more likely to purchase additional products.

KPI Disadvantages

• Does not provide insight into the quality of sales or customer satisfaction.
• May encourage unethical or aggressive sales tactics.
• Does not consider external factors such as market conditions or customer behavior.

KPI Industry Benchmarks

The industry benchmarks for the Number of Financial Products Sold per Client can vary significantly depending on the type of financial services company:

• Retail Banks: 2-3 financial products per customer
• Investment Companies: 1-2 financial products per customer
• Insurance Companies: 1-2 policies per customer

6. Time spent with each client

Definition

The 'time spent with each client' KPI measures the amount of time spent by a financial institution with each client. It takes into account the time spent on various tasks such as client onboarding, client servicing, and cross-selling.

Use Case

Calculating this KPI is important for financial institutions to ensure that the right balance is maintained between servicing existing customers and onboarding new clients. It helps in identifying opportunities for cross-selling and improving customer engagement.

How To Calculate KPI

To calculate the 'time spent with each client' KPI, divide the total time spent by the institution with its clients by the total number of clients. The formula for the calculation is:

Calculation Example

If a financial institution spent a total of 600 hours with 100 clients, then the 'time spent with each client' KPI would be:

KPI Advantages

• Helps in identifying opportunities for cross-selling and improving customer engagement.
• Assists in maintaining the right balance between servicing existing customers and onboarding new clients.
• Provides insights to financial institutions in identifying inefficient processes and streamlining them to optimize productivity.

KPI Disadvantages

• Does not take into account the quality of time spent with each client, which may affect the overall effectiveness of the service provided.
• May not be relevant for financial institutions that focus on a specific customer segment or niche market.
• Not suitable as the only metric for measuring the performance of the sales team.

KPI Industry Benchmarks

According to industry benchmarks, the 'time spent with each client' KPI for financial institutions should range from 3 to 5 hours per week or 25 to 45 hours per month per client.

7. Number of financial education seminars conducted

Definition

The number of financial education seminars conducted KPI measures the effectiveness of financial literacy outreach efforts. The KPI tracks how many seminars the organization has conducted over a given time period. This metric provides visibility into the extent to which a company or individual's financial literacy program is reaching the target audience.

Use Case

Financial education seminars are an essential tool for educating people about personal finance. It is one way for organizations or individuals to measure the effectiveness of their financial literacy outreach efforts. By tracking the number of seminars conducted, organizations or individuals can evaluate the performance of their financial literacy program and identify areas for improvement. For financial advisors and institutions, the KPI can help identify whether they are targeting the right audience and whether the information communicated is relevant and effective.

How to Calculate KPI

To calculate this KPI, use the formula below:

Calculation Example

Suppose a financial institution conducts 20 seminars on financial education over six months. Therefore, the number of financial education seminars conducted during this period is 20.

KPI Advantages

• Measures educational outreach efforts
• Provides a quantitative metric of performance
• Provides insights into the target audience of a financial literacy program
• Helps identify areas for improvement

KPI Disadvantages

• Does not measure the quality of seminars conducted
• Does not provide insights into how well attendees understood the seminar materials
• Does not indicate how much attendees learned from the seminars

KPI Industry Benchmarks

There are no industry-wide benchmarks for this KPI, as performance can vary widely depending on the type of seminar, target audience, format, presentation style, and materials used. However, it is useful to compare the number of seminars conducted over time to identify trends or patterns in performance.

In conclusion, monitoring the right Key Performance Indicators (KPIs) is a crucial part of any successful Fintech business. By tracking these seven metrics, you can ensure that you are on the right track towards achieving your goals and objectives.

• Customer satisfaction level is key to any business, as happy customers tend to generate positive word-of-mouth and increase revenue.
• Number of new clients is vital to growing your customer base and expanding your reach in the market.
• Average revenue per client helps you determine the profitability of your business, enabling you to adjust your pricing model and product strategy.

Additionally, keeping an eye on client retention, number of financial products sold per client, and time spent with each client is equally important. By focusing on these metrics, you can ensure customer loyalty, increase revenue, and manage your time effectively.

• Client retention rate is an indication of customer satisfaction and loyalty to your brand.
• Number of financial products sold per client can help you cross-sell and upsell relevant products, increasing the lifetime value of your customers.
• Time spent with each client can help improve your service delivery and prevent unplanned delays.

Ultimately, keeping a close eye on these KPIs will help you make informed decisions and maintain a competitive edge in the rapidly evolving Fintech industry.