Since its rise in 2008, Financial Technology, or FinTech, has been disrupting the banking industry, reshaping businesses, and transforming the way consumers manage and use money. Innovators and entrepreneurs are storming what was once considered an inefficient, inflexible arena, and plenty of investors are following close at their heels. Investment in FinTech skyrocketed from $928 million in 2008 to $3 billion in 2013; since then, the numbers have soared even further. FinTech’s myriad of advancements signal an increasing momentum for the movement on a global scale.
Whilst debating whether new fintech startups would eat the banker's lunch yesterday, I stumbled across a really interesting read by Philippe Gelis, co-founder and CEO of FX firm Kantox. It was so good that I asked Philippe if I could put it on the blog and he kindly agreed. Read and enjoy ...
The idea is simple: services such as Prosper sidestep traditional bank loans, which can involve complicated applications and lengthy wait times, and connect borrowers and lenders directly online. Both Prosper and rival Lending Club launched in 2006. In spite of the 2008 economic meltdown and a host of regulatory issues, the two emerged as credible financing alternatives with very real consumer demand. Prosper has issued more than $3 billion in total loans, while Lending Club has facilitated more than twice that amount, to the tune of $7.6 billion.
Blame Apple: customers expect to be delighted. By placing consumer delight at the center of its growth strategy, it has set new standards for customer engagement.
Today’s customer expects nothing less from their financial management experience. Wealthfront and Betterment are new disruptive forces in the wealth management space. They offer carefully curated, personalized experiences for the next generation of investors.
Customers have flocked to these new services. By the end of 2014, Wealthfront and Betterment were managing $1.7 billion and $1.4 billion in assets, respectively.
"There are hundreds of startups with a lot of brains and money working on various alternatives to traditional banking," Dimon wrote in the letter. "The ones you read about most are in the lending business, whereby the firms can lend to individuals and small businesses very quickly and — these entities believe — effectively by using Big Data to enhance credit underwriting."