The subscription services are increasing. During the pandemic, Americans spent more time at home and more money on digital products that make it easier to navigate our new normal.
More than ever, Americans' lives are being helped by companies like Netflix, Instacart, and, of course, Amazon, which have posted record-breaking earnings since its 2020 Prime Day savings event.
A recent survey even found that spending on subscription services has more than tripled since March, with one in three respondents saying they bought a new subscription online during quarantine.
Now, a new concern remains: is the market becoming too saturated? The question doesn't just apply to streaming services and food delivery companies - it's an issue financial tech companies can't afford to ignore.
As subscriptions become an increasingly attractive business model, fintech will be forced to consider whether this proven strategy is worth the risk
Fintechs should take note of subscription services
In the CompareCards survey, two-thirds of respondents said they bought a new streaming service primarily for entertainment. However, that doesn't mean there's no room for fintechs to carve out their own space.
Bradley Leimer, co-founder of financial advisory firm Unconventional Ventures, said he has certainly seen more fintechs explore subscription models. As Leimer explained, the financial services industry may not have fully embraced the idea, but it is "starting to take notice". Leimer, who has more than 25 years of industry experience, believes fintechs can learn a lot from subscription services, as long as they're willing to search in the right place.
An important lesson? Transparency. Subscription services offer businesses the opportunity to get ahead of their rates and benefits.
"When we talk about subscriptions, the clearer and more transparent we are, the better," said Leimer.
Acorns is a simple case study. The micro-investment app offers three levels of membership: lite, personal and family, each with a clearly explained list of features. For what it's worth, the company added more than 2 million users between March 2019 and March 2020, according to Forbes.
Leimer said fintechs should also take note of how subscription services work together. For example, he pointed out how Amazon users can add an HBO subscription to their Prime Video account, essentially "bundling" two subscriptions into one. Fintechs, Leimer said, could take a page from that playbook.
"There are many ways to skin that cat: for a fintech company to generate income and for a customer to get extra value," Leimer said.
