Fintech has become a multi-billion dollar consumer driven industry, touching all aspects of our everyday lives.
Goldman Sachs recently launched a new open source platform to make its trading technology data accessible to clients transforming itself into a true tech player following the ranks of Google and Facebook.
The significant disruption of the financial sector comes by no surprise as the industry has developed its own strategic approach to revolutionise a once stale sector. Here are the top five lessons fintech can teach other industries.
Collaboration is key
Instead of fighting for market share, fintech companies and banks are building relationships for the benefit of both parties. According to CB Insights data, six major banks in the US have made strategic investments in more than 30 fintech companies since 2009.
Banks often do not have the structure, flexibility and mindset needed to offer the emerging fintech services. However, banks have started to embrace the rise of fintech – setting up innovation labs and accelerators to foster fintech innovation and collaboration. UBS recent Future of Finance Challenge is just one example of a bank tapping the startup community.
Find your niche
Fintech startups are not only innovating what banks already do but have invented completely new business models to fit client's needs. Many fintech companies have found their niches catering to special interest groups. Many online lenders for example focus on serving the financing needs of small business owners that big banks just cannot manage efficiently.
Companies like Kickstarter give access to a funding platform for early stage entrepreneurs. With this niche the company has received more than $1.5 billion (£990 million) in pledges from 7.8 million backers to fund 200,000 creative projects.
Incubate for success
Fintech realised early on the power of incubators. There are already more than 40 fintech focussed incubators operating around the world, assisting companies and providing a supportive ecosystem in the first stages of growth.
Incubators give fintech entrepreneurs a rich startup environment with a range of administrative, consulting, and networking services to accelerate the early stage growth. Startupbootcamp Fintech is one of the most prominent examples with eleven different accelerators all over the world. The incubator has helped 281 startups raise an average of $670,000 (£442,000).
Boost your lobby with mighty alliances
Fintech companies are frontrunners in lobbying for success with mighty alliances. Startups recognised quickly the importance of government support to help build trust and encourage growth.
Last month Prime Minister David Cameron welcomed a fintech 2020 manifesto in the UK to gain $8 billion (£5.2 billion) of technology investment over the next four years. Working with regulators and embracing compliance gives fintech startups a tremendous competitive advantage, and strong impact, in the finance industry and beyond.
Persistence pays off
Persistence is key when growing a sustainable business. It takes patience, a lot of fine-tuning and complying to make it to the top. Trust from customers can be lost very quickly, especially in the finance industry after the 2008 global financial crisis.
Lending Club, the industry's biggest firm in peer-to-peer consumer credit decided to pause their operations in 2008 to make sure it complied with all regulations.
The company sold shares for 27 cents in its first year of operation in 2007, which are trading at $14 (£9) a share today. It is said to now lend around $757,000 (£500,000) every hour.
Toby Triebel, CEO and Co-Founder of Spotcap