The global startup scene has witnessed rapid growth in the last couple of years as many people start to find the entrepreneurial drive to set out on their own. The success stories of startups that grew from humble beginnings into billion-dollar brands are also fuelling interest and hope for entrepreneurs.
However, a cursory glance at the startup scene will suggest that there’s practically hundreds of startups in every area of human endeavor. Of course, you can always find a niche for your startup by launching a new or innovative product. However, despite the crowded nature of the global startup scene, there’s still a wealth of opportunities for entrepreneurs in the Fintech sector.
The results of a study conducted by International and CB Insights in 2015 revealed that global investments in fintech companies was $19.1B – venture capitalists sunk about $13.8B into the Fintech sector. This piece provides insights on three opportunities for startups that would like to breakout into the Fintech market.
You can create a robo-advisor platform.
The term robo-advisor is an amalgamation that brings ‘robots’ and financial advisors together – robots in the context refers to smart computer programs and algorithms. Robo-advisors is an exciting new frontier for startups that want to use technology to provide financial advisory services to investors. Robo-advisors are simply wealth management programs that provide automated and personalized investment advice with minimal inputs from a human financial advisor.
Interestingly, you can develop robo-advisor programs to provide investment solutions for stock trading, binary options trading, and forex trading among others. Hence, there’s always room for the interested startup to breakout into the robo-advisor scene with an innovative product. The appeal of robo-advisors in the investment community lies in the fact that they are readily accessible to investors more than human financial advisors. Hence, if you want to develop a robo-advisor program, you should consider a mobile first approach so that you don’t miss out the elements of convenience that makes robo-advisor appealing to investors.
You can develop a peer-to-peer lending platform.
Startups can also provide investors with an opportunity to invest in the debt-funding market by creating an online peer-to-peer lending platform. Peer-to-peer lending is a new fintech market in which people lend and borrow money on a peer-to-peer basis. Peer-to-peer lending is speedily gaining traction because its provides individuals, startups, and SMEs to received debt funding when traditional lending systems are impractical, inconvenient, or unavailable.
Investors also get to record profits from their peer-to-peer lending activities in the form of fixed income returns on loans – the returns on peer-to-peer loans are often higher than the return on traditional fixed assets such as bonds. Nonetheless, investors can choose to give out loans commensurate with their risk-taking quotients. Needless to say, the loans with the highest returns are often reserved for borrowers with the highest likelihood to default. Medium-risk loans have medium returns, and low-risk loans sport low returns for investors.
Consider Low-cost online brokerages.
There’s also an incredible opportunity for startups that want to breakout into the online brokerage market. Many potential investors tend to shy away from the market because they don’t think they have enough trading/investment capital to get an audience with the top-tier investment managers on Wall Street.
Wall Street is also not helping matters with its focus on exclusive products for Ultra-high net worth individuals. Hence, the proprietors of the mom and pop shop down the road might find themselves priced out of the market when they examine the charges and fees that Wall Street investment bankers require.
However, the rise of online brokerage platforms is already leveling the ground between the average individual investors and the billion-dollar institution investors. The unique selling point of online brokerages lies in their ability to provide regular investors with low-cost access to a wide-range of financial products. In addition, online brokerages can make it possible for the regular investor to invest in foreign assets and geography in order to diversify their portfolio and protect their wealth from geopolitical risks.
