The finance and banking industry is ripe for disruption. New technologies mean that there are ample opportunities for higher efficiency and more secure transactions. Digital transformation of the sector is only a few years away – if it hasn’t happened already.
Budding entrepreneurs, therefore, should take note. Fintech offers massive opportunities to create startups that become the new mainstream in the industry. There are real opportunities here to make a lot of money.
So what kind of startups could you investigate? And how could you disrupt the sector?
Blockchain Businesses That Cut Out The Middleman
Banks are essentially glorified middlemen. They are a trusted party that buyers and sellers use to facilitate transactions on their behalf. When you pay a merchant using your debit card, the bank subtracts money from your account and dumps it in theirs.
If banks didn’t carry out this function honestly or accurately, there would be a run, and people would put their cash elsewhere. Trust, therefore, is central to the industry.
Blockchain, however, provides opportunities to debit one account and credit another, without the need for any trusted intermediaries at all. Instead, smart algorithms and networks of computers ensure the correct transfer of money, with no central authority.
Understandably, there are massive business opportunities here. Banking isn’t free, so financial institutions often charge high costs for their services. People paid these when there were no alternatives. But now that they have options, they may decide to go down cheaper routes.
Solutions That Improve Efficiencies In The Insurance Sector
The insurance industry grew dramatically during the 20th century. People wanted the security that it offered, and they were willing to pay high premiums.
The industry, however, has a problem. The people who are most likely to make a claim are also those more willing to purchase insurance. It seems like a no-brainer, but it is a core issue in the industry because it increases the price for everyone else. Safe drivers, for instance, often wind up compensating those that are at higher risk.
Now, though, technology is changing all that, allowing companies to assess the real risk of a customer, instead of just estimating it. Startups are trying to take advantage of this, providing solutions to the industry that enable more accurate pricing.
There’s support too. The InsurTech Accelerator, based on the East Coast, says that entrepreneurs can get access to meetings, feedback sessions, and more to support their efforts.
Better Personal Finance Management
The complexity of personal finance rose considerably in recent years. Consumers, therefore, need the help of technology to make better decisions about their personal finance.
The market for apps is increasing all the time. Companies like Mint did a good job of bank account tracking and budgeting, but customers want a unified experience. They want to organize all their financial activities from a single dashboard.
For instance, there’s a need for solutions that integrate investment with personal banking. Customers also want to be able to pay via their money management apps, not a separate program. Innovators should take note.
