Merging financial services with communications technology, the fintech revolution has arrived. Its advent was met by the open arms and wallets of venture capitalists who helped global funding for financial technology grow 67 percent year over year in the first quarter of 2016 alone.
With the ability to cut costs while improving service quality for everything from making payments to managing wealth, fintech is a disruptive force to be reckoned with. It is shaping the future of lending and trading in ways that make peer-to-peer business models possible and changing how consumers feel about dealing with banks and asset managers. Those service firms who do not innovate accordingly face the possibility of being regarded as a relic, and may lose up to $4.7 trillion in business to financial technology startups, according to Goldman Sachs.
Here are three fintech organizations that are shaking things up for traditional economic institutions.
With a minimum initial deposit of just five dollars and investment profiles bearing names like “Delicious Dividends” and “Roll with Buffet,” Stash is clearly targeting a new generation looking to manage, save and grow their money. Central to this strategy is a mobile app which provides personalized guidance and helpful tips while breaking down complicated financial terms.
Stash recognizes that starting low and adding gradually is what builds micro-investor confidence and the application even offers a curated set of options to choose from based on the preferences of new clients. One of the fastest growing millennial-focused fintech startups, Stash prides itself on addressing the overlooked needs of the individual investor by not just offering financial services but also encouraging its users to gain financial literacy.
Airbnb and Uber are hugely successful examples of what is now called the “sharing economy” and Daweda is fintech’s answer to this exploding trend of peer-to-peer (P2P) dealings. The EU regulated trading platform offers an online marketplace that enables its clients to buy and sell contracts directly to one another. By eliminating the involvement of a broker who may have outside interests in the outcome of a trade, Daweda ensures a transparent trading process.
With a minimal contract size of just $10, its orderbook also levels the playing field by grouping first time traders separately from more experienced ones. The fintech startup’s goal is to make the trading world a better place where users can feel confident they are engaging in fair, honest and well-informed P2P transactions.
Investing can be an intimidating process and trustworthy advice can be difficult to find as many advisors are compensated for recommending certain products that might not always benefit the client.
That is why the minds behind Betterment set out to pioneer a new investment management movement. They offer software that invests in a globally diversified portfolio of low-cost index funds which are selected based on advanced algorithms, not the vested interests of brokers. This strategy is coupled with always-on-call personalized guidance offered at a fraction of the cost of traditional financial services by a fintech startup determined to take the confusion and uncertainty out of the typical investment experience.