This text follows a chunk I wrote that checked out six fintech concepts from the primary decade of fintech that did not go mainstream – algorithm-based purchase/promote/maintain recommendation, commerce mimicking, P2P lending, P2P insurance coverage, on-demand insurance coverage, and standalone monetary planning apps. However there’s extra to the story. Given the extreme curiosity within the fintech sector, it’s value inspecting three extra ideas that originally appeared promising, however largely failed to vary the monetary providers trade.
Earlier than diving in, it is very important as soon as once more first outline how we’re categorizing “failure.” This text will not be centered on highlighting the demise of particular person high-profile fintech startups or numerous failed fintech initiatives undertaken by massive companies (akin to BloombergBlack or UBS’ SmarthWealth).
These concepts rolled out with hype and momentum, however they in the end failed to vary the best way the common individual manages their cash.
Slightly, this piece will give attention to fintech concepts that obtained a point of preliminary hype and momentum, however in the end failed to vary the best way the common individual manages their cash. So, with these caveats, listed here are three extra fintech ideas from the final ten years of fintech that didn’t succeed.
Unbiased monetary advisor search and matchmaking instruments
Within the early 2010s, roughly 15 companies launched an internet search or matchmaking service designed to assist people discover a monetary advisor that greatest met their wants. The standard method to monetary recommendation – the place rich people often discover an advisor via pals, household, or an area monetary advisor’s proactive gross sales outreach – lags behind trendy on-line product search tendencies. Day-after-day, customers store on-line and pour over person evaluations. The logic behind this early wave of startups was that the expertise of discovering a monetary advisor ought to mimic the best way customers search for different services on-line.
Monetary advisor matchmaking startups typically took considered one of two approaches. The primary method was to supply a search software that permit customers discover native monetary advisors primarily based on parameters akin to belongings below administration, expertise, ranking, gender, and many others. Right here’s an instance of a monetary advisor’s profile on the now-defunct monetary advisor search software Tippybob.
2013 Screenshot of a Monetary Advisor Profile at Tippybob. Picture: Greg Easterbrook
The second method was to supply an internet monetary advisor matchmaking service. Prospects had been requested to enter fundamental details about their earnings, age, belongings, wants, and many others. and the agency would introduce them to an area monetary advisor who was chosen as a personalised match for his or her wants.
As of 2023, there are nonetheless a number of impartial websites (akin to Good Asset and Zoe Monetary) providing some sort of monetary advisor matchmaking software. And naturally, Googling “monetary advisors in my space” will yield paid advert placements. On the whole, nevertheless, impartial monetary advisor search and matchmaking instruments did not go mainstream. Most rich people nonetheless discover their monetary advisor through conventional strategies fairly than counting on web-based approaches.
This concept did not catch on for 2 causes. First, these startups had been unable to beat the problem of constructing a two-sided community for a product with a gradual gross sales cycle. Advisors didn’t wish to be a part of these matchmaking providers until there’s a lot of customers on the platform. With out a vital variety of advisors on the platform, nevertheless, these providers struggled to draw customers. This chicken-or-the-egg drawback was compounded by the very gradual gross sales cycle of economic recommendation.
Secondly, monetary recommendation is essentially completely different from different kinds of items and providers offered on-line. There are doubtlessly huge unfavourable penalties if a shopper chooses the fallacious monetary advisor and so they obtain dangerous funding recommendation. Ordering a pizza or a pair of footwear on-line doesn’t carry the identical stage of threat.
Customers who wish to work with a monetary advisor appear inclined to solely wish to rent somebody with whom they’ve a excessive stage of non-public belief. Thus, the monetary advisor enterprise mannequin has confirmed resilient to disruption by on-line product search and comparability providers which have upended so many different industries.