The coming together of fintech disruptors and financial services companies

by | Apr 7, 2017

At invstr we have had the pleasure of interviewing many industry leaders in FinTech (Financial Technology). We’ve spoken to commercial banking startups, crowdfunding specialists, business networking experts and many more who are beginning to change the way society relates to finance, not just on a business level, but on a personal one as well.

The key theme has been disruption because these companies have actively sought to circumvent traditional methods of conducting business and personal transactions at every level. Used to using a bank that charges you extortionate foreign exchange fees? There’s a business that changes that. Want to invest in a startup on the cheap? There’s crowdfunding firms that lets you do this with as little as £10. Frustrated by the exclusivity and lack of transparency of the investment world but want to invest your own money and save for your future? New fintech ventures allow you to invest in low risk high quality funds managed by people who feel the same way about the industry.

FinTech disruptors were once not taken seriously as competition for big established Financial Services companies. Yet, as they have grown their customer bases and appeal, larger firms quickly realized they posed a serious threat to them as rivals. These FinTech firms have brought consumers to less expensive and more user-friendly options which have especially engaged younger audiences, something which many large-scale firms have failed to achieve. Indeed, studies show that banks have struggled to regain customer trust since the financial crisis of 2007/8, especially with regards to young people. In an age where millennials are more knowledgeable about technology than ever before, finance is becoming more synonymous with online payments, virtual currencies and the like, rather than traditional banks they find on the high street.

This presented a challenge. What were these traditional firms to do about these engaging new ventures which were siphoning away customers, particularly those from the millennial generation? Some have seen a business opportunity. Journalist Oscar Williams-Grut recently referenced a report from PwC in a piece for Business Insider discussing this very issue. He writes, “PwC says the financial services establishment has moved from viewing fintech startups as an amusing aside to seeing them as crucial collaborators, with a huge proportion hoping to partner with new innovators in the future.”

Indeed, the joining together of these firms could prove to be a match made in heaven. After all, what do these traditional financial incumbents lack? Usually an advanced level of digital-savvy that startups have in abundance. However, they do tend to have large client bases, made up of those who’ve been with their brand over a lifetime. Startups however are still in the initial phase of carving out their place in the market, and though they may offer new services, many customers are still unwilling to change their approach to finance. One could benefit the other. Grut writes, “Fintech startups are fast realising that it takes a huge amount of money and effort to attract a customer base that stretches beyond early adopters and the tech-savvy. Partnering with a large incumbent who will pitch them to their client base seems like a sensible growth hack.”

“Established finance companies, meanwhile, are struggling to innovate at the pace and to the standard demanded by clients. They are simply too big and cumbersome to deliver new digital products. Partnering with a nimble startup can fix this, allowing the incumbent to offer a slick service to clients with their brand on.”

The new report from PwC outlines the way financial services businesses perceive fintech competitors. In particular, it identifies consumer banking, fund transfers and payments, investment and wealth management and even insurance as being the hardest hit areas for traditional firms. If you want to read the full report, follow the link here: Redrawing the lines: FinTech’s growing influence on Financial Services

At invstr we make no secret of the fact we want to disrupt the industry by demystifying the markets. We want people to be self-directed investors. Many people want to learn how to invest, but feel overwhelmed by the complexity of finance. It’s a key stumbling block for many people with an interest in trading. In truth, most are baffled by financial markets , seeing them as a ‘closed shop’ that should be left to analysts and other finance professionals to interpret and understand. We don’t believe this perception is accurate! Though it may take practice and a little education, investing is a skill just like any other, and we want to challenge these notions which have been propagated by Financial Services firms for many years, many of whom have increased their profits by capitalizing on the public’s lack of financial savvy. Well, we want you to have the knowledge the professionals have – that’s why our platform contains investment games to help you practice, a vast array of data and news to help you make sense of the business world, and social functionality to share your thoughts and new ideas with your fellow investors.

Want to learn more about the markets and how to become a better investor?

Download the Invstr App now.

ALL RIGHTS RESERVED © INVSTR LTD. 2017

Risk Disclosure:
Invstr is a technology platform, not a registered broker-dealer or investment adviser. Invstr does not offer its own recommendations of any security or provide its own research to any user regarding any security transaction or order. Brokerage services, including fractional trading of US securities, are provided to Invstr users by DriveWealth LLC, a regulated member of FINRA/SIPC. DriveWealth may not establish investment accounts to residents of certain jurisdictions. For more information, including disclaimers, risk and transaction fees click here. Please note, investing involves risk and investments may lose value. Past performance does not guarantee future results.

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ALL RIGHTS RESERVED © INVSTR LTD. 2017

Risk Disclosure:
Invstr is a technology platform, not a registered broker-dealer or investment adviser. Invstr does not offer its own recommendations of any security or provide its own research to any user regarding any security transaction or order.
Please note, investing involves risk and investments may lose value. Past performance does not guarantee future results.
Brokerage services are provided by the following:
US traded securities, including fractional trading, are provided to Invstr users by DriveWealth LLC, a regulated member of FINRA/SIPC. DriveWealth may not establish investment accounts to residents of certain jurisdictions. For more information, including disclaimers, risk and transaction fees click here.
India account traded securities are provided by SIC Stocks & Services PVT Ltd. SIC does not make any personal recommendations to buy, sell or otherwise deal in investments. Investors make their own investment decisions. The services and securities provided by SIC may not be suitable for all customers and, if you have any doubts, you should seek advice from an independent financial adviser. For more information and disclaimers, click here
Cryptocurrency trading is provided by Coinbase. To be eligible to use the Coinbase Services you must be at least 18 years old. Your eligibility to access certain Coinbase Services also depends on the country in which you reside. For more information on eligibility of use and disclaimers go to Coinbase, or click here

 

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