Banking, finance, and insurance have been largely constant and unchanging for decades. It’s been the very definition of an “old boys’ club”, static, institution, monopolistic, and powerful. Competition hasn’t come from within, at least not to the same extent that it once did, with monster banks working hard to simply take chunks out of each other. Fintech is slowly taking over entire business segments, and mobilizing a new demographic that is anything but old.
For those who are totally opposed to the Fintech sector, this will really frighten you.
Change is scary, but necessary. Technology has stepped in and created innovation from stagnation, and pivoted an entire industry full of players too top-heavy and cautious to even move. Suddenly, banks have no choice but to re-think their long-term strategy in order to continue to compete against more agile financial tech solutions that have seeped into the market and somehow managed to gain traction against market oligopolies in some cases, and huge financial resources in most.
Fintech is scary enough for many people, especially when considering how disruptive this sector has been. Fintech has already disrupted banking, proving the model was broken, second, it has disrupted capital markets by democratizing how capital can be raised and invested, and third, it’s beginning to change how the insurance business works. It used technology and cultural shifts towards regulatory changes to allow everyday non-accredited investors to invest. Equity Crowdfunding empowered people to potentially become a part of big change, taking something previously the purview of venture capitalists, angel investors, and the wealth, and making it accessible. Entrepreneurs benefit from easier access to capital, and investors from more options.
What all this shows is that we are in the midst of a fintech revolution, and there’s no way to stop it. Clinging to old ways of doing things, insisting that they were somehow better because they were familiar implies that there is room for fear in finance and in business. Fintech is a positive. Investors, consumers, and indeed even the banks should know that this is cause for optimism, because it represents an opportunity to be better, to do better, and to do more.
What this means is that new entrants that are disrupting these sectors are becoming global dominant companies overnight, something we have not seen in the past. Consider some of the equity crowdfunding success stories in the US and internationally: OurCrowd has successfully closed deals for companies looking for upwards of $25M in funding and StartEngine has more than $70M in reservations, and these stories aren’t even a scratch on the surface.
It takes very forward thinking investors to see this and many are getting on the list. It isn’t the investors that hold back, saying that new forms of finance like equity crowdfunding won’t work, it’s the established industry players, and they do it because they’re afraid. They refuse to adapt. They see the change, and that 2016 is the year that fintech companies step into the limelight, and begin to become household dominant worldwide. They are not used to this kind of competitor. They’ve only ever competed against organizations exactly like their own, and that scares them.
Brace yourself, for those that believe this is only happening in your city or country: the disruption is global and fintech is a tidal wave.