With venture capital investments of $ 17 billion and more than $ 36 billion in FinTech's total investment, FinTech Hype reached its peak in 2016. The number of 1,525 single transactions alone is impressive. FinTech everywhere. It is now clear that many FinTech startups address new customer expectations, such as mobile access (N24, Fidor / O2), transparent financial products (niiio, moneymeets) and very easy to use financial services (bezahlt, Hufsy) much better than traditional banks and savings banks.
The air for FinTechs is getting thinner
Nevertheless, it is expected that the air will be thinner for FinTechs. A major reason for this is the uncertainty of many investors regarding the sustainability of the respective early business models. Most of the FinTechs are still in the investment mode. It is often unclear how long they need to win enough customers with sufficient sales to work cost-effectively. After several investment rounds of the past years many investors ask for the number of customers, sales volumes, fees and profit potentials. These, however, are not long-lasting. Recently, some promising FinTechs had to give up, such as the Robo Advisor Cashboard, Mobile Banking Provider Avuba or P2P Payment App Cookies. The first FinTech wave is coming to an end.
If, on the one hand, it is clear that banking can be much better than the traditional banks and savings banks, but on the other hand, the economic successes of FinTech's first wave are not yet recognizable, where can the interesting FinTech business models be found?
Way out of the FinTech profitability trap
The now more than 100 FinTech bank cooperations in the German-speaking world can be seen as the most visible way out of the FinTech profitability trap. For example, the partnerships of the social trading platform wikifolio with the comdirect bank or the peer-to-peer credit platform Smava with the Postbank.
Some of the first FinTechs are in the hands of banks or strategic partners. For example, Fidor Bank was bought up completely by the French banking group BPCE. The deal: Fidor Bank brings innovation and BPCE financial strength. And with PayU, Kreditech has taken on a strategic partner as a strong investor.
The focus or even the conversion of FinTech business models from B2C to B2B appears more promising than its own private customer hunt. For example, figo has developed successfully from the provider of a banking app for private customers to the B2B API provider for banks and savings banks. And the digital FinTech Services from webID (video account opening), gini (photo transfer) and fino (account transfer) also find good sales with banks and savings banks.
It remains exciting to see how many FinTechs are ending the end of the first wave and which business models are proving to be sustainable.
FrankSchwabSpeaks.com