For a while now the financial sector has been experiencing a spurt of innovation mainly driven by financial technology start-ups (FinTechs). The finance sector has typically been perceived as rather traditional and conservative, it has never been really susceptible to, or even vulnerable to external impact (except political). However, this has started to change.
Today, experts in the financial world tend to get back to the heated debate of: Can FinTechs actually undermine the position of banks? There is a quite significant divide between them, but regardless of the number of yeses and noes, the majority considers FinTechs to be reshaping standards within the financial sector.
Payments, insurance, wealth management and borrowing. You are probably already familiar with multiple options of payments through unconventional means – digital wallets (Google Wallet, Square), integrated Point of Sale Systems (POS), person-to-person (P2P) payments (Circle, PayPal) etc. This area is the fastest growing domain of financial services.
While FinTechs wealth management and insurance products are trying to get on payments level of disruption, online lending is winning the race. By quickly catching up, online lenders like Kabbage, Funding Circle or RateSetter started to take a piece of something that banks always have had a monopoly on.
Online lending based on peer-to-peer channels, removed middleman from the process of borrowing. It simply allows individuals to borrow and lend money to each other through a digital platform. It is one of the fastest and easiest ways to get a business loan.
So what online lenders do, they make the application process easier by accessing your data, and quickly linking it to your application. They use algorithms and predictive modeling to assess the risks. Most interestingly though, they connect those who want to lend and borrow money.
All in all, it is worth learning more about disruptive innovation and disruptive technologies in finance as they might have a direct impact on our lives. Particularly if you search for ways to fund and expand your business, or you have the resources that could help others.