The verdict is in: the fintech revolution is no passing fad. It marks a substantial disruption of the financial services industry. That means traditional banks should be worried. While they may be able to adapt to the changing landscape by partnering with fresh, young startups, many will lose customers as more and more people embrace the convenience that fintech companies offer.
The firms listed here are among the fast-growing fintech startups in the world. They’re poised to overtake traditional financial institutions by offering streamlined, user-friendly alternatives to major financial services. They’re bringing about innovations, like putting the power to invest right in the palms of user’s hands via native Android app development and other mobile alternatives. These are the top ten companies you should be watching into next year:
Ant Financial is part of the Alibaba Group, and offers several different financial services. One of the most popular is Alipay. Both businesses and individuals throughout China use this secure channel to conduct transactions. The company generates revenue by charging a variable transaction fee. While smaller transactions cost nothing, high value transactions can carry a fee of about 1.2%.
Lufax is something of a fintech aberration, in that it also operates several brick-and-mortar locations. However, the success of its digital services is particularly noteworthy. Lufax offers users a secure online trading platform for financial assets. With low interest rates (between 4-8%), many users find it more appealing than its US counterparts.
Stripe offers a range of services designed to help companies do business online easily. The company provides tools to make and accept payments, safeguards against fraudulent payments, and general assistance for managing an online business. Thanks to features like StripeConnect, clients can easily accept payments from across the planet. Like Ant Financial, it charges minor transaction fees to generate revenue.
Paytm is India’s largest fintech company. Initially, this firm simply made it easier for users to pay utility bills online. Now the service has expanded, giving users the opportunity to easily shop online. Recent funding will also allow the company to launch and grow its new digital banking services.
Banks and brokerage firms aren’t the only financial institutions that need to adapt to the fintech revolution. Insurance companies must also learn to compete with new startups. For instance, Zhong An is a Chinese company that sells property, cargo, credit, and liability insurance to customers exclusively via the internet. It also handles claims online, and uses data to help clients find the ideal insurance plans for their needs.
Qufenqi offers a smart solution to a major ecommerce problem: customers opting not to make purchases due to high prices. This electronics seller gives customers the option to pay for items in installments. Users who may have been reluctant to make a costly purchase are more likely to complete the transaction if they don’t have to pay the full price for an item all at once.
SoFi provides customers with a wide range of lending and wealth management services, including mortgage refinancing and personal loans. The company has also built its own investment platform. In general, it gives users easy access to services that were only accessible via traditional financial institutions until very recently.
With Credit Karma, users can check their credit score for free once a week. Like many other credit monitoring services, the company also refers users to financial products (like credit cards) for which they could reasonably expect to be approved. These personal recommendations feature ads, which allow the company to keep its services free while still generating revenue.
Oscar Health leverages the most useful technologies available to help customers find the ideal medical insurance plan for their needs. Those who use the service often praise its transparent fee structure.
Fintech threatens traditional financial institutions by offering financial services to unbanked or underbanked people. These are customers who either don’t have bank accounts, or who make limited use of financial services. With Mozido, they can make payments via their mobile phones without a bank account.
These examples illustrate just how beneficial fintech can be to consumers. They also illustrate the precarious situation traditional financial institutions find themselves in. Customers will abandon their current financial services providers if a more convenient option comes along.
Banks, brokerage firms, and insurance agencies must learn to embrace this technology, before they get left behind. Luckily, by collaborating with these kinds of startups, they can offer the advice and expertise the newcomers need while taking advantage of the ideas and tools the fledgling companies offer.