There are many reasons which have made Fintech a sector to look out for. The exponential growth in the last few years have made this an industry difficult to ignore. In years to come, a lot more is expected, with promises being made that will change the way consumers interact with financial services. Jalak Jobanputra, Founder and Managing Partner of Future Perfect Ventures, addressed the subject at the FINNOSUMMIT in Bogotá last February 16, 2016, and gave the audience a glimpse of what is in store.
Jalak began her presentation stating that Fintech offers tremendous opportunities for several reasons. The compression in margins after the crash in 2008 has brought concern to many clients and it is precisely these customers who are ready to adopt new banking models that are more transparent and secure, supporting developing technologies like blockchain. Banks now realize they have to look outside their boundaries to innovate, and recognize they can’t do it all internally. That’s why most banks are building innovation labs and collaborating with accelerators, to develop relationships with Fintech startups. On the other hand, millennials are currently a strong target sector in the world’s economy. This generation is made up of digital natives whose lifestyle is forcing banks to build new products and adapt their existing services to new customer behaviour patterns. And last but not least, financial services have an enormous opportunity with unbanked consumers in the emerging markets, this sector demands new ways of formal financial services that will help eradicate financial exclusion.
This opens up opportunities for financial technology startups to begin offering services where the traditional banking systems have left gaps. That’s why we have seen a lot of activity in Fintech over the last year, and significant amounts of money being invested into these new technologies. In just 6 years the sector has grown from under a US$2 billion investment to US$12 billion, particularly in the United States where models that have been successfully working for many years are now being replicated in other parts of the world. This figure is expected to continue to grow, because of the enormous opportunities this industry offers.
The Managing Partner of Future Perfect Ventures explains that the money in Fintech has gone mostly to Payments solutions, closely followed by the Personal Finance Management. With less investment but still significant, the other sectors that are growing are Lending, particularly P2P lending marketplaces, and last but not least, Bitcoin, whose growth is expected to increase significantly in years to come.
But this is not the end of the story, there are a lot of subsectors within Fintech that will continue to grow and develop solutions that will change the way consumers interact with financial services. That is why Fintech expert Jalak Jobanputra advises entrepreneurs to think creatively about the needs of the customers in each sector, and then how the marketplace platform could address those to develop tools than can successfully change the lives of people. There are still a lot of opportunities to innovate in financial services if entrepreneurs think outside the box. There is a future to create and how it will look depends on the ideas innovators choose to develop.
“It’s going to take a while to get to a global market, but if you told someone 20 years ago all of the things that are happening right now thanks to the internet, they wouldn’t believe it.” Said Jobanputra. It’s going to take some time, but experts are expecting not only a lot of innovation, but also a revolution that will unite the world’s economies under one economic system, making globalization more real than ever before. So, in the aggressive and changing market we are experiencing in the financial sector, “the ones who achieve to analyse information and create innovative solutions in the shortest period of time, are the ones who will succeed.”