Fintech · Finance

What areas of finance have startups not yet disrupted?

Kate Murphy Hustler at Hustle Con

August 30th, 2015

Fintech startups have disrupted many areas of the financial world -- fundraising, payment, loans, etc. But what areas of finance remain relatively untouched (if any) by startups? And which ones (if any) are pretty saturated at this point?

Karl Schulmeisters Founder ExStreamVR

August 31st, 2015

The short answer is "all of them"

I think the thing that folks miss about "disruptive technology" is that it literally disrupts the existing model of business.  Thus even though "mobile payments" is considered "disruptive" - if you can come up with a solution that is better and serves potential customer needs better, you can disrupt the disruption.

And example of this occurred with HTTP/HTML    In the late 80s early 1990s there were Prodigy, CompuServe and AoL that had online systems that allowed you to send mail and interact on BBSes.

Microsoft and IBM both were developing competing solutions to be rolled out in the 1993-1994 time frame when along came HTML from the physics lab CERN and completely disrupted the efforts of Microsoft and IBM (which was rumoured to be buying Prodigy)

The disruption was so complete that Windows 95 came out without a browser or an online mechanism because what Microsoft had been building was not compatible with HTML and Microsoft had to go out and license their first browser from a 3rd party when their attempt to buy a company was beaten out by AOL

So disrupting disruption is possible.   Which means to some extent the question is poorly formed.  No disruption is ever "saturated" that's the nature of disruption.

I also have a question about the very nature of your question.  Periodically we see these types of questions "what part of Industry X is ripe for innovation"  come through FD.

To me this seems like a flag saying

Hi!  I want to innovate successfully in some market but I don't have any really good ideas or don't know any good ideas to invest in

Seems to me that's a formula for making a small fortune... out of a large one.  Innovation, particularly disruptive innovation, invariably comes from either

  • understanding an industry or sector so well, you can see a different way of doing things that will disrupt that sector (Microsoft Office, CrowdFunding )
  • seeing a vision of where a new technology can move a whole industry or create an industry (iPhone \, Facebook, cameras in cell phones)
  • stumbling into a disruption while pushing a new technology to do something else (HTML for exchanging physics documents, Google for search then ads)

Those are things you really cannot get from asking a question in an online forum.  They are things that require creativity, perseverance, and luck


August 30th, 2015

A year ago, I thought fintech was saturating its market. However, in the last six months, I've met founders of fintech startups in niche markets where there is hundreds of millions of dollars in transactions and apparently, there are no fintech competitors in these spaces. Remember how IBM won't bother with a market that is less than a billion in annual revenues to IBM? Visa, Google, Amazon, etc. also won't bother with these small markets, yet a small team can do quite well in a $500m market with no competitors.

Orion Parrott Founder and CEO, Lendsnap YC S16. We're hiring!

August 30th, 2015

With mobile payments, there are more than 600 competitors in the US. But I still hestitate to call it saturated (or suggest you shouldn't go there) because there will always be the next mobile payments company (whether by that name or another category) that makes it big.

I'm working in the mortgage space and there is lots of room for more innovation here. As Michael Brill says, it's the top of the first!

I don't think it makes sense to talk about the market of fintech. There is not one fintech market. There are so many diverse verticals to be defined that it is simply not one market. Just as you can't really consider "the internet" one market. As technology advances, there will always be new markets developing.  They appear as a harmless feature or company, then are called niches when others join them and they grow until we see them as markets.

Michael Brill Technology startup exec focused on AI-driven products

August 30th, 2015

Best of luck Orion! I'm in the process of refinancing and I made the mistake of entering my details into a couple of sites. I'm pretty sure at this point I'm going to have to enter some identity reassignment program to stop all the emails and phone calls.

Michael Brill Technology startup exec focused on AI-driven products

August 30th, 2015

Depends what you mean by disrupted. Remember that most fintech efforts are tiny gnats in the world of banking behemoths. Even the poster child for success - P2P lending - is < 0.001 of consumer lending... and it's dominated by institutional investors. Where's the disruption?

I merely point that out to say that we're at the top of the first inning with this stuff and *nothing* is saturated if you look at it the right way. 

Peter Johnston Businesses are composed of pixels, bytes & atoms. All 3 change constantly. I make that change +ve.

October 25th, 2015

The elephant in the room here is government.

Finance isn't a real market, because governments dictate it. They fiddle the figures. For example...
"We're backing our promissory notes with gold".
"Oh we haven't enough gold"
"OK, so we'll abandon the gold standard."

"Oh we're going to have a recession."
"So we'd better print money and throw it at the banks to keep them alive - we can always give it back afterwards"
"So when are we going to give it back?"
"Oh soon, soon (7 years passes)"

Money isn't real. It is a lie to keep people doing things governments want.
If we matched the promissory notes with actual real time value the western world would go bust overnight.
That hasn't been disrupted. Not even a little bit.

Linda W. Kwok CoFounder of FinTech that's a cross between Yelp and Facebook

March 9th, 2018

I think there is a lot that can be done in Insurance. How do we buy auto insurance? IMHO we can drill down that data a lot more than the set of questions I am currently asked. We barely drive our car. Why should we pay premium close to others who drive a lot more. I know there is MetroMile, but I hear service is not great so for the time being we are sticking with Geico. Dash is collecting a lot of data on cars and drivers. With that data, a lot can be done just in this one sector.

Dane Madsen Organizational and Operational Strategy Consultant

March 10th, 2018

Forget crypto currency. It is the wild west with regulation stepping in that will change the discussion. Look at things that are fixed that can disintermediate add-on services, such as title insurance. It is a $17 billion annual industry that needs to be gone. Current state of technology makes rapid response platforms highly expensive (think about high speed trading and the enormous energy required to process transactions) but the low turnover applications will be the first to modernize. Sweden, Georgia (the country), and Honduras are using blockchain for all land titles now.

Sia Nazari Actively looking for a career opportunity

October 24th, 2015

I would say trading, and automatic trading and risk management.

David Still Founder of Start-ups, Entrepreneur, Financier and Advisor

August 30th, 2015

Very short answer: a form of intrapreneurship; i.e. spin out and buy a majority ownership (small valuation and large percentage) in a cost center in a fin that is a critical function but not a core competence or money-maker. Sign a long term service agreement with the fin spinning it out and leave it with a minority interest in a sub. Then convert the business to provide it to 3rd party customers and improve the economics of the business. Eventually you would capture market share, better control pricing, optimize your plant(s) and roll-up subs into one class of shares in an industry classification that commands higher private and public valuation multiples than the fin; i.e. unlocking locked value. Be sure you are an expert in the service space of the spin-out.Obviously there is more to this.