Scottsdale, Arizona, December 15, 2022 – i3strategies®️, a strategy and market intelligence firm with unique expertise in the Financial Crime Risk and Compliance space, is pleased to present our latest blog post.
Isn’t FinCrime Compliance supposed to modernize?
Aren’t financial institutions replacing costly, inefficient, and outdated systems?
Why do FinCrime Compliance software companies struggle to find buyers? Sellers remain puzzled why products that speed up work and reduce cost are so difficult to sell.
There is a disconnect between market needs and software solutions. Is it because FinCrime Compliance software sellers say things that alienate buyers?
Buyer’s Mindstate & The Status Quo
FinCrime Compliance officers manage dozens of moving parts: risk assessments, monitoring systems, hiring and training workers, KYC processes, and SAR reporting. They do these to achieve what is the ultimate measure of their performance - passing internal audits and regulatory exams.
Once okayed by auditors and examiners, FinCrime Compliance leadership must do it again year after year. Then something happens - a status quo is created, and the most important objective is to maintain it. The same systems, processes, and people remaining in place ensure job security for everyone.
Now imagine what these same FinCrime Compliance officers think when they receive an email, a cold call, a LinkedIn message, or see a marketing display at a conference that suggests it's time to “reimagine,” “disrupt,” or “innovate?” Do you think their brains spot opportunity or risk?
Compliance professionals, by nature, are cautious and attracted to things that feel safe and secure. Compliance professionals who want to “disrupt” put their jobs at risk. Certain jobs attract certain dispositions.
Modernization Collides with Status Quo
Much is written about how FinCrime Compliance must modernize. The government says it too. Regulators publish guidance encouraging institutions to update systems and processes, and Congress passed a law, The Anti-Money Laundering Act of 2020, which calls explicitly for FinCrime Compliance modernization.
Smart and ambitious software developers see this, and it makes sense they set out to build products that address issues afflicting FinCrime Compliance, mainly issues outdated and inefficient technology creates.
However, something happens that stands in the way of modernization - the FinCrime Compliance buyer’s satisfaction with the status quo collides directly with the software company’s ethos that believes “innovation,” “disruption,” and “re-imagination” is what the market wants. Sellers think buyers want to be “cutting edge.” This is rarely true, yet sellers, believing everyone wants to modernize, shower the market with messages that alienate most buyers.
FinCrime Compliance software companies understand inefficiency and outdated systems cause financial institutions problems. It makes sense to offer products that improve this, and some product companies see early success. But, many others struggle to find customers, close sales, and build sustainable year-over-year revenue. How does messaging help or harm these efforts?
Telling risk-averse customers that your product is disruptive and changes operations is risky. In some cases, it may work, but in most, it will not. Even still, most risk-averse FinCrime Compliance buyers know that using existing inefficient and outdated systems cannot go on forever. So what can sellers do to get reluctant buyers to buy?
One critical step is for FinCrime Compliance software sellers to create messaging that connects with the mind state of cautious buyers. These buyers know the status quo is unsustainable yet are reluctant to buy products that upend existing compliant operations. Figure out a way to bridge this gap.
Beware of Jargon and Buzzwords
Messaging should avoid confusing language. So much of marketing is filled with buzzwords and technical jargon. Many people don’t even understand the meaning of commonly used phrases like “machine learning” and “artificial intelligence.” If we ask 20 people to define machine learning and artificial intelligence, we get 20 different answers.
Avoid jargon, but if you do use it, describe it in the context of FinCrime Compliance. For example, “Our systems use Machine Learning to detect Adverse Media better. We developed this by having AML experts read more than 1,000 known adverse media articles. They then tagged the relevant words in the article, teaching our machines to spot real negative news.” For buzzwords like “disrupt” or “reimagine,” - just stay away from those; they sound like BS.
We Get it. You Magically Reduce False Positives
This one is tricky for software sellers. You believe your product reduces false positives. The problem is, every other company thinks this too, and you all sound the same.
Several years ago, we reached a tipping point where the “we reduce false positives” message became background noise. Unfortunately, some products don’t reduce false positives - it is just marketing. Or, a product will reduce false positives after the buyer undertakes a multi-year, multi-million dollar data cleansing and reorganization project. Both these make buyers skeptical.
So what to do if your product does reduce false positives? Get creative. Can you use humor in marketing and sales meetings? “Hey, guess what? Here is something you haven’t heard in the last few hours, ‘We reduce false positives!’”
Consider a short video where you clearly and simply show your product in action and how it specifically reduces false positives. Tell the viewer you understand their skepticism, and then show them your product is the real thing.
Don’t Threaten A Buyer’s Income
FinCrime Compliance buying involves multiple decision-makers, including the end-users. Most FinCrime Compliance executives don’t buy new software applications without first hearing the opinion of the staff that will end up using the product. If your messaging tells these staff that your product will reduce headcount, that is a problem.
Reducing inefficiency is the reason software exists. We all know this, but when software threatens our jobs and income, we will fight against it. In some cases, the fight is futile. Highway toll booth operators did not stop EZ Pass. Still, an AML analyst can derail a sales opportunity by telling their manager your software doesn’t do what it promises. FinCrime Compliance leaders listen to their trusted staff. (This is why trials, when not managed properly, can kill a deal).
Show Buyers, You Understand Them
Successful messaging speaks the language of FinCrime Compliance buyers. It connects with their problems. It's clear, honest, and easy to understand.
If the FinCrime Compliance buyer wants to buy your product, they will need the support of their management and finance department. They need to justify the budget expense. If the seller does not equip the buyer with a clear and straightforward value message, that may kill the deal. Give the buyer messaging they can use to close your deal.
The potential FinCrime Compliance software market is enormous. Billions will be spent over the next decade improving systems and processes. Remember that smart buyers know this but are unclear of the pathway and particularly concerned about the impact on their program, staff, and themselves. If you can speak to these concerns using the language of buyers, that sets you apart. Make your message clear, simple, and empathic. And avoid using any of the BS buzzwords and phrases listed here.