Opportunities in Fintech for Entrepreneurs to Explore

Fintech is a continually growing industry. The vast gap between what consumers can currently do and what they can do is one of the main reasons why the industry is growing rapidly. 

According to PWC, in the next 3 to 5 years, slightly more than three-fourths of incumbent financial institutions (77% to be exact) will focus more on innovations to increase customer retention. 

New technology always excites people, and Fintech is undoubtedly still at its inception phase. Entrepreneurs who want to do something in tech but aren’t sure of which industry they should focus on should consider going into Fintech. 

What exactly is Fintech? 

The general consensus about Fintech is that it is a group of disruptive technologies and solutions in the field of finance. Startups are usually the key innovators and leading players in the fintech scene. 

The typical organizational structure of startups allows them to produce minimum viable solutions faster than traditional organizations. Startups also focus on implementing agile processes, reducing the time it takes to test their solutions in the market. 

Here are a few critical opportunities in Fintech for entrepreneurs: 

Peer to Peer Lending

Borrowing and lending are ancient concepts. Previously, the only way to get a loan was through a bank or through friends and family. If you have a poor credit score, you’re not going to be approved to get a loan from a bank. And if your friends and family aren’t doing too well financially, you have negligible options. 

Technology has changed the way we view the world and do business. It has also introduced new opportunities for people all around the world.  

Companies like LendingClub have made peer to peer lending accessible. People who want to earn by lending do not have to find people on the street anymore. They can go to platforms like Prosper or LendingClub, register as a lender, deposit money, and assess the right people to give loans to. 

The main challenge in peer-to-peer lending is the delinquency rate, aka, how many borrowers take loans but do not repay them in time. To counter this, startups will need to improve their vetting processes while setting up contingency plans in case borrowers do not repay their loans. 

Peer to peer lending is still a new concept, which is why even with giants competitors like LendingClub, you can still carve out a name for yourself. Find something unique to offer in the niche and market it effectively for the best results. 

Personal finance

Personal finance is a booming niche that all tech-focused entrepreneurs should consider getting into. 

Today’s consumers are relatively more aware of their finances and are also enthusiastic about financial movements like FIRE (Financial Independence Retire Early).  

There is still a lot to be done in the personal finance niche. Solutions like Mint help people keep their finances on track, while Acorns and Robinhood are assisting people to invest at their convenience. 

These kinds of technologies are breaking barriers and are bringing financial solutions to the people that need them. After all, understanding your audience and making sure to facilitate them with tech like mobile apps, chatbots, and live chat app is something that will ultimately help people enter the world of personal finance.

Personal finance has grown to be a broad field with its own set of problems. Keeping users engaged, maintaining company growth, and constant innovation are still areas that need improvement. New entrants in Fintech can learn from their predecessors and keep these things in mind when developing their own solutions.  

Increasing consumer awareness is also something that entrepreneurs in the personal finance industry should proactively be doing. The better your startup is at spreading the good word about tech and personal finance, the more your consumer base, and in turn, your audience will grow. 

Digital investments

Investing used to be something reserved for people who were already financially stable. The risks involved in the stock market and the lack of information available to the public, as well as the 409A valuation price to determine a stock's value, made for consumers who were hesitant to invest in anything and who would end up just saving that money instead. 

These days, with the advent of smartphones and other mobile devices, information is readily accessible to people. People are also more willing to invest in companies they feel an attachment to. Mobile banking and investing are also on the rise, as are platforms that offer expertly curated stock market news and research tools.

Stock Apps like Robinhood, Acorns, etc. have given people the ability to invest in stocks and other funds from their mobile phones. Fundrise also offers people the chance to crowdfund and make investments in the real estate sector. 

People still want greater variety in the places and niches they can invest their money in. They also want a service that is intuitive to use and has a small learning curve. Understanding your audience’s investment needs is the first step to creating a startup geared for success. 

Mobile banking and payment processing

Let’s face it, in most parts of the world; traditional banks are still king. Even if they take steps towards digitization and come out with a mobile app, it is substandard in most cases. 

Several startups have already seen a gap in the market and have come out with their own solutions. Monzo (UK based digital-only bank), Atom, Tide are just some of the banking solution providers available on the market today. 

Payment processing services like PayPal, Payoneer, TransferWise, have allowed freelancers worldwide to relax and get their payments efficiently.  

Other companies like Stripe, Xoom, Square are also making significant headway.  

Mobile banking is the future, and the demand for a robust, secure, yet easy to use the app is still high demand. 

Conclusion

Fintech is undoubtedly a niche that tech enthusiasts should consider getting into. Even if you are not looking to start a company immediately, working for any of these many startups can prove to be an excellent asset for your later career. 

There is still a lot to do in Fintech. Any niche that faces high demand but short supply can be something prospective entrepreneurs would want to look into.  

According to Crowdfund Insider, there are at least 67 fintech unicorns (billion-dollar companies) operating worldwide. The next unicorn just might be your future fintech startups. 

Photo by Austin Distel on Unsplash