Introduction
Most large banks and financial institutions have been slow to embrace the opportunities offered by FinTech – sometimes out of fear, but mostly because they view FinTech as a competitive threat.However, this is slowly changing and many banks and financial institutions now realize that they need to work with FinTech companies in order to better serve their customers.
Less Discuss About Successful Fintech Companies
Finally, we’ll spend a bit of time discussing what makes successful FinTech companies so special – not just their technology or business model, but the people behind the company. A note on definitions: We will use the term “FinTech” in this article to refer to companies whose primary business is related to finance, such as Robo-advisors, crowdfunding platforms, and blockchain companies.
Popular Business Models
The following are some of the more popular business models that have emerged from FinTech over the past few years. Many of these models can also be applied by banks looking to expand their product portfolio. However, they might require investments in technology or changes in processes before it becomes available within an existing banking structure.
1) Robo-advisors
Robo-advisors are automated investment services that provide financial advice without requiring human intervention. This category includes solutions like Wealth front, Betterment, and Personal Capital. These companies aim to offer the same type of financial guidance as traditional asset management firms for a fraction of the cost.
2) Peer-to-peer lending
This business model is all about connecting lenders with borrowers in an online marketplace. Because these marketplaces often rely on big data and machine learning algorithms to assess credit risks, they can offer loans at more attractive rates than banks.
Since Lending Club’s launch in 2007, peer-to-peer lending has been growing rapidly from a global volume of $16 billion in 2014 to over $ billion by mid-2016.
3) Blockchain and cryptocurrencies
Blockchain is the technology that powers Bitcoin and other cryptocurrencies. It’s an open, distributed ledger that records information (the “ledger”) in a verifiable and permanent way. While cryptocurrencies like Bitcoin are interesting as investments or as alternative currencies to fiat money,
4) Big data and analytics solutions
This category includes companies that offer big data tools, software platforms, and consulting services related to finance. These companies aim to help financial institutions improve their business processes by leveraging insights from big data.
5) Marketplace lending
This category includes peer-to-peer lending platforms as well as other companies that provide a platform where different types of financial products can be traded. On Mintos, for instance, people from different countries can invest in consumer loans issued by the company and earn interest on their holdings.
6) Big data and analytics solutions
This category includes companies that offer big data tools, software platforms, and consulting services related to finance. These companies aim to help financial institutions improve their business processes by leveraging insights from big data.
7) Big data and analytics solutions
This category includes companies that offer big data tools, software platforms, and consulting services related to finance. These companies aim to help financial institutions improve their business processes by leveraging insights from big data.
8) InsurTech
Insurance may seem like an area where little innovation could happen in the short term. although this is far from the case. Many InsurTech startups are using technologies like the Internet of Things (IoT) or big data analytics to make the insurance industry more efficient.
9) RegTech – Regulatory Technology
RegTech is a term that describes applications of new technologies such as blockchain, which help to improve the speed and effectiveness with which regulators carry out their work.
10) Digital banking solutions
As traditional banks continue to offer an ever-increasing number of products and services online, digital banking becomes more and more important every day. For instance, one company called smartly offers a digital identity verification platform that can help banks to improve user authentication and reduce the cost of compliance, among other benefits.
11) Mobile banking solutions
In addition to traditional online banking services which are now offered by most banks, several companies have been designing mobile apps for financial institutions. For example, Fintonic develops iOS and Android applications to make it easier for users to manage their finances from their smartphones. Other examples include Monese, Monzo, Plum and Curve.
