We’ve reached an inflection point in “fintech,” where early disrupters are moving from challengers to industry leaders in their own right, as they expand their services, develop their brands, and increase market share.
Index partner Mark Goldberg makes three predictions in an article published in Fortune.
Fintech startups will start to look more like banks
For the past several years, fintech players have caused a significant unbundling of the traditional financial industry. These startups initially appealed to consumers by making it easier and more enjoyable to perform individual banking transactions, such as moving or borrowing money, saving, investing, or trading stocks. They relied on a superior product experience to hook early adopters and build solid user bases. It’s how innovation usually starts, with startups digitizing the best and more vulnerable parts of a traditional business.
This year we’re going to see more and more of these early disruptors expand their services and bundle more functionality around their core products, continuing a trend that gained momentum last year. It makes sense for budgeting apps to include checking, or for loan services to go after the market for credit cards. We’ve seen that untapped upside starting to reflect in some of these companies’ multi-billion dollar valuations. Robinhood, one of our portfolio companies, soared above $5 billion last year because of its impressive financial metrics but also for its future opportunity. The company has millions of customers who love the experience and are actively engaged, representing an enormous addressable market for launching expanded services.