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Have a Crisis Management Plan in Place
The first step in handling a FinTech crisis is to have a crisis management plan in place. This plan should outline the potential risks that the company may face and how to mitigate them. It should also identify the key stakeholders, such as employees, investors, and clients, and their roles in the crisis management process. Moreover, the crisis management plan should have a communication strategy that ensures transparency and clarity in communication during the crisis. An excellent example of a company with a robust crisis management plan is Square, a mobile payment solutions provider. In March 2020, Square’s stock price plummeted by over 30% due to the COVID-19 pandemic. However, the company had a solid crisis management plan in place, and its CEO, Jack Dorsey, communicated regularly with employees, investors, and clients. Square also launched new products, such as Square Capital, to support small businesses during the pandemic. Consequently, Square’s stock price has recovered, and the company has continued to grow its market share.Identify and Prioritize Risks
The second step in handling a FinTech crisis is to identify and prioritize the risks that the company may face. This involves assessing the potential impact of the risks and how to mitigate them. For example, if the company’s data security is at risk due to a cyberattack, the company should prioritize mitigating this risk by strengthening its cybersecurity protocols. A good example of a company that identified and prioritized risks during a crisis is Robinhood, a stock trading app. In January 2021, Robinhood faced a crisis when it restricted trading in certain stocks, including GameStop and AMC, due to market volatility. This decision faced criticism from its clients and resulted in a public relations crisis for the company. However, Robinhood identified the risks and prioritized communication with its clients to explain its decision. It also strengthened its cybersecurity protocols to protect its clients’ data from potential cyberattacks.Communicate Effectively
The third step in handling a FinTech crisis is to communicate effectively with all stakeholders. This involves being transparent and providing clear information about the crisis and how the company is handling it. Communication should be regular, proactive, and focused on resolving the issue as soon as possible. This can help to rebuild trust and confidence in the company.Sign up for the Connect Nigeria daily newsletter
An example of a company that communicated effectively during a crisis is PayPal, a digital payment solutions provider. In November 2020, PayPal faced a crisis when a customer’s account was hacked, and $6000 was stolen. The customer took to social media to criticize PayPal’s security protocols and communication. However, PayPal responded immediately, communicated transparently with the customer, and refunded the stolen money. This response helped to mitigate the impact of the crisis and maintain PayPal’s reputation as a secure and reliable payment solutions provider.
Collaborate with Regulators and Industry Partners
The fourth step in handling a FinTech crisis is to collaborate with regulators and industry partners. This involves seeking their advice and expertise in managing the crisis and complying with regulatory requirements. Collaborating with regulators and industry partners can also help to build trust and demonstrate the company’s commitment to responsible business practices. An excellent example of a company that collaborated with regulators and industry partners during a crisis is Ant Group, a Chinese fintech company. In November 2020, Ant Group was scheduled to go public with the world’s largest initial public offering (IPO). However, the Chinese regulators suspended the IPO, citing concerns about Ant Group’s regulatory compliance and systemic risks to the financial sector. Ant Group responded by collaborating with regulators and industry partners to address the concerns raised. The company also underwent a comprehensive restructuring to comply with the regulatory requirements. This response demonstrated Ant Group’s commitment to responsible business practices and helped to restore trust in the company.Learn from the Crisis
The final step in handling a FinTech crisis is to learn from it. This involves conducting a post-crisis review to identify the lessons learned and how to improve the crisis management plan. Companies can use the post-crisis review to identify weaknesses in their processes and systems and take steps to address them. By learning from the crisis, companies can become more resilient and better prepared to handle future crises. An example of a company that learned from a crisis is Stripe, a payment processing company. In 2018, Stripe faced a crisis when a software update resulted in a temporary loss of service for some of its clients. Stripe responded promptly and effectively to restore service to its clients. However, the company conducted a post-crisis review to identify the root cause of the issue and how to prevent it from happening in the future. As a result, Stripe strengthened its testing and deployment processes, making them more resilient to potential issues in the future.Register to attend the CN Business Mixer
Conclusion
The FinTech industry is vulnerable to crises, and FinTech companies need to have a robust crisis management plan to handle them effectively. This plan should include identifying and prioritizing risks, communicating effectively with stakeholders, collaborating with regulators and industry partners, and learning from the crisis. Companies that handle crises effectively can maintain their reputation and market share, while those that do not may suffer irreparable damage to their brand and financial performance. Examples of companies that have handled crises effectively include Square, Robinhood, PayPal, Ant Group, and Stripe. Featured Image Source: Naija NewsGot a suggestion? Contact us: editor@connectnigeria.com