Assessing the level of interest

Editor's note: Bri McIntosh is research director at research firm InSites Consulting. Sophie Jenkins-Anderson is research and experiments lead at fintech firm Auden. 

“Just last month, the financial service provider Auden published its Pandemic Penalty report…Some 50% of its clients now have savings of less than £100…single-parent families are the most likely to resort to short-term loans and a third of them rely on food banks [yet]…only half those in financial difficulty have actually made contact with money advice providers. All those statistics show just what an endemic problem debt is in this country as we reach, I hope, the end of the COVID-19 pandemic. It is no wonder that people find themselves in financial crisis when the unexpected strikes – from a fridge no longer working to a family bereavement.” 

The above is part of a speech given by U.K. MP Paul Maynard during a debate in the U.K. Parliament on the impact of COVID-19. Maynard drew on primary data from Auden to make the connection between the financial impact of the pandemic and the wider problem of “endemic debt” in the U.K., as well as highlighting how the most financially vulnerable have suffered a “pandemic penalty” as a result of the virus. While the story of the data may have a historically familiar ring to it, the source of the data is less well-known. In fact, as Auden has only recently been soft-launched in the U.K., it is unlikely that the population will have any real awareness of the company. How did a brand which is very much within its infancy get itself into a position whereby it is informing debate in Britain’s highest political institution? 

Few startups begin from a customer-first position. Typically, the priority is the product or service and getting it to market as soon as possible. For others, there is a perception that market research is out of their league, as highlighted by Buckingham and Webb, who have noted, “Although smaller companies – those with fewer than 250 employees – account for 99% of U.K. businesses in the private sector, many of them think market research is only for giant businesses and big budgets.” (Buckingham and Webb, 2020)

In other words, building customer insight into a business from the start is less of a norm and more of an anomaly.

This article tells the story of how fintech startup Auden bucked this trend by adopting an insight-led, customer-first approach from the outset. Not only did this enable the brand to disrupt and reframe the market, it also allowed it to position itself as an expert in understanding the real needs of its target audience(s) and very quickly helped establish it as a credible and authoritative voice to influential bodies both within and outside the U.K. financial services sector. 

Underserved and overcharged 

Auden is a socially responsible consumer finance fintech company headquartered in Manchester. Its first product tackles the high-cost-short-term credit (HCSTC) market. It won’t be surprising if this raises a few eyebrows, given that this U.K. sector is still suffering the reputational costs caused by the behavior of early (now defunct) brands such as Wonga and their irresponsible and exploitative lending practices. While significant regulatory progress has been made, many customers accessing HCSTC still remain underserved and overcharged. Auden’s aim is to positively disrupt this market by better serving customers through a commitment to responsible lending. This commitment runs through the business, and the appointment of the well-respected Victoria Gosling OBE as chief strategy officer is one particularly visible symbol of a brand ready to make a lasting, positive difference. 

As new market entrants, Auden’s first challenge was to identify who its core customers are. The emphasis on “who” is very much deliberate, as one of the early observations made by the brand was the predominance of quantitative, demographic-led profiling. While useful in signposting where these customers were likely to come from, there was virtually no equivalent research that brought to life who these customers actually are. What is the wider context behind those who have accessed HCSTC? How do they think and act with credit? How do the challenges they face become challenges in the first place? What matters to them? If Auden did not know who these people were, how could it properly service their needs and claim to be a customer-first business? 

This market deficit led to Auden taking the first of several decisions to positively disrupt the status quo. First, it would remeasure the target audience from a customer-first perspective and create a solution that would bring this audience to life. The team at Auden partnered with InSites Consulting and commissioned a blended quantitative and qualitative approach to look at the market through a clean, alternative lens. 

The first stage involved a market-mapping survey with 2,000 users and considerers of short-term loans (defined as being typically between £100-£1,000, having a repayment window of two to 12 months, with a typically higher than 100% APR and offered from a provider rather than a bank). To maintain robustness and comparability, the survey replicated the sample frame used by the Financial Conduct Authority (FCA) mapping report. Once this initial stage was completed, 25 week-long digital ethnographies were undertaken with short-term loan users to deep-dive into their attitudes and perceptions about credit, as well as into financial management more broadly. The data from both stages was thoroughly analyzed and scrutinized, generating four key personas. These personas were then exposed to measurement by media specialist MediaCom, with the personas in total accounting for much of the market.

Auden now had a clear idea of who these different customer types were. The next challenge involved understanding their needs, wants, challenges and barriers through their lived realities. 

Engage and observe

Auden required a solution that would allow them to “live with” their target audience, being able to engage and observe on a regular basis to fully understand the world through their eyes. The team again partnered with InSites Consulting to create an online, long-term Let’s Talk Money community made up of 500+ users and considerers of short-term loans. This provided the Auden team with several areas to explore, ranging from those with a more tactical focus (such as the appeal of different financial tools and aftercare comms preferences), through to much more substantial strategic pieces that explored links between finances and wellness, the relationship between faster and slower thinking, as well as journey mapping the experiences of consumers who have found themselves in arrears. 

This success of the online community meant that, within just over a year of Auden existing (and not yet in-market), the brand had a deep and rich understanding of its potential target customers. Insights gleaned from the Let’s Talk Money community allowed the InSites Consulting team to identify eight deep truths that exist across the short-term loan audience, which, in turn, provided Auden with a clear understanding of the core needs that sit behind attitudes and behaviors towards money management. This commitment to customer-first insights provided a robust platform for Auden to develop, refine and optimize its initial suite of products to best serve these customers. 

A wealth of knowledge 

By embedding evidence-based insight into the business from the outset and drilling deep to flesh out and identify the core needs of its target customer(s), Auden has assembled a wealth of knowledge and understanding about customers who, up until that point, were hidden behind data sets and demographics. The brand had truly broken new ground in bringing to life those who are most often underserved and overcharged by the credit market. 

Positioning the brand as a thought leader in this space did not go unnoticed by influential bodies within the sector, with the business being invited to present research findings to the FCA as well as the Money and Pensions Service. It also opened doors that enabled the team to make significant representations to the Woolard Review – a report focused on highlighting change and innovation in the unsecured credit market – while also being invited to share their thoughts with politicians about the financially vulnerable. Auden has also been recognized as a responsible lender by national body Responsible Finance.

The commitment to a customer-first approach allowed Auden to be thought of as a leader when it came to understanding the impact of the pandemic on financially vulnerable members of society. This was underlined by the release of the Pandemic Penalty report – a study based on the experience of 1,150 users and considerers of short-term credit during the pandemic – which found that those already struggling financially were penalized disproportionately. As Chief Strategy Officer Victoria Gosling noted, “When there is no safety net, accessing finance and support is harder – it simply costs more. That’s the pandemic penalty…[and this] disproportionately affected women, single parents and key workers in retail and health care.”

The impact of this report brings us back to where our story started, with Paul Maynard MP citing these findings within Parliament and making the case for tackling the wider issue of debt in the U.K. and, by proxy, the need to better assist those who are overcharged and underserved by the current market. 

The case for insight 

Auden made the anomalous decision to prioritize understanding its potential customer base before developing products and services that best suit their needs. This contrasts with the many startups that try to walk and run at the same time. Some manage to do this but for others, the outcome is an attempt to manage what might be called operational chaos as they settle and find their true customer base. 

The aim of this article is not only to showcase how a brand can harness insight to optimize market readiness but also to reassure other startups that insight is not the sole preserve of bigger businesses. Further, putting customers at the heart of a business from the start significantly accelerates the chances of success ahead of launch-to-market.