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May 20, 2013

The Underserved Are Ready to Disrupt the Financial Industry



Innovation isn’t working out the way it used to, and it’s starting to show, with too much renovation of existing services and not enough invention (which requires higher risk) an investment in new social and analytical technologies, and the proper end-to-end management system to show the best results. Innovation, at its best, will provide new services or products to new markets in need. When markets get too hungry though, and established providers get too comfy in chasing the tested and true high-margin business, an industry becomes vulnerable to underserved markets giving rise to startups. And then people like me start talking about disruption.

The financial industry is getting a little shaky in this respect, with an underserved consumer base giving rise to financial technology or “FinTech” startups. According to a report from the Center for Financial Services Innovation (CFSI) and Core Innovation Capital – which draws parallels between the current landscape of the financial industry and the technology disruption tied to the Silicon Valley startups from what seems like so long ago now -- there are many forces at work giving new FinTech startups the opportunity to shuffle the marketplace.

There seems to be a slow decline in cash usage which, when coupled with the fallout from the financial crisis, provides millions of people ready to have credit alternatives presented to them. Not to mention, the established infrastructures making up the foundations of established businesses and the resulting supply chains are hopelessly byzantine, providing an incredible number of platforms on which to provide new services to this hungry market. Simplicity is what people are looking for.

It’s a fear of new technology that looks to be the biggest culprit in lowering the shields on the “Starship Financial”, however. According to the CFSI report, a big foothold the FinTech startups have come in the fact that consumers simply love technology, and why wouldn’t they? Technology should make services more accessible, and it will when financial companies use it. The risk for disruption comes when already-established companies refuse to embrace social media even when the benefits are plain to see.




Edited by Rory J. Thompson
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