Driven by rising interests in blockchain, digital cryptocurrency trends, and innovative financial products, FinTech startups appeared almost overnight. Now, the financial sector is booming, with giants like Coinbase, SoFi and Credit Karma valued at $8B, $4.4B and $4B, respectively, and numerous other companies staking a claim of their own. But what does all of this mean to the financial sector as a whole? Are FinTech startups proving to be the disruptive force they were initially envisioned to be? And if so, what does this mean for the future?
Bold Business publisher Ed Kopko and associate publisher John Miles caught up with FinTech guru Philip Goodeve earlier this year and picked his brain on what lies ahead. Philip is a Harvard Business School graduate and serves as the Chairman of Integral Wealth Securities Limited located in Toronto, Canada.
Given the challenges that bitcoin currently faces, it is worthwhile examining what cryptocurrency trends might be ahead of us. At the same time, understanding how FinTech startups will increasingly fit into the financial services sector offers important insights for change. As with many other sectors, digital disruptions have completely revamped everyday products and services. And it appears that the financial sector is experiencing similar growing pains.
FinTech Startups’ Early Threat to the Financial Industry
Remarkably, FinTech startups began appearing between 15 to 20 years ago. However, it wasn’t until 2015 that the actual term “FinTech” became a popular search term. Beginning around 2008, hundreds of new FinTech startups began appearing. In fact, the growth of these companies was nearly doubling each year for some time. However, the appearance of new FinTech startups peaked in 2014 and has since been less robust. Many suspect this suggests a maturing effect of the FinTech sector.
Without question, FinTech startups brought a significant degree of disruptive change to the industry. With consumers more accustomed to using mobile devices to manage financial services and transactions, FinTech startups served many needs. At the time, larger financial institutions simply were not able to keep pace. And with more efficient platforms and services, FinTech startups threatened many of the traditional banking and finance players. This case affected not only banking and capital markets but also real estate, insurance, and investment services.
FinTech Startups and Financial Institutions: An Evolving Collaboration
The shrinking number of new FinTech startups is not the only indication that the market is beginning to mature. Financial services firm Deloitte has reported that a number of other developments also suggest the same. For one, FinTech startup investments are now beginning to come from other sources besides venture capital. Specifically, private equity and debt financing options are now more common. Likewise, many startups today are pursuing IPOs or are being acquired by other companies. All of these trends are common in an industry that’s starting to show signs of maturing.
Indeed, FinTech startups have brought innovation to the financial industry as has cryptocurrency trends and other digital services. But even FinTech startups can gain leverage by collaborating with larger financial institutions. And large financial institutions now realize FinTech startups offer strategic opportunities as well. Specifically, such partnerships allow FinTech startups access to new markets and opportunities to gain regulatory knowledge. Financial institutions can also enjoy new markets and products with FinTech startup partnerships. This shift from competitor to team partner is beginning to now appear in this sector.
What’s Next for FinTech and Cryptocurrency Trends?
With the recent setbacks in Bitcoin due to scalability issues, cryptocurrency trends are notably less enthusiastic. Nevertheless, reduced enthusiasm does not mean cryptocurrency trends have vanished altogether. New FinTech products are being developed to address problems like high fees that were in part responsible for the Bitcoin crash. And worldwide, many countries are continuing to explore the future concerning cryptocurrency trends. Indeed, the U.S. and China are leaders in cryptocurrency trends and investment. However, other nations such as Canada, France, Singapore, and England are also actively exploring options as well.
The advent of blockchain empowered cryptocurrency trends, and it is therefore likely that advances in digital currencies will continue. As regulatory oversights evolve and as new issues are identified, innovations in cryptocurrency trends can be expected. But the advantages of decentralization of currency, as well as improvements in global exchange, will likely be increasingly appreciated. At the same time, the advantages of blockchain will continue to encourage FinTech startups to find solutions to cryptocurrency problems. Thus, while the FinTech sector does appear to be maturing, innovations are far from over. As a result, one can expect the FinTech sector to continue to be quite dynamic in the years to come.