This text follows a chunk I wrote that checked out six fintech concepts from the primary decade of fintech that didn’t 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 extraordinary curiosity within the fintech sector, it’s price inspecting three extra ideas that originally appeared promising, however largely failed to alter the monetary providers business.
Earlier than diving in, it is very important as soon as once more first outline how we’re categorizing “failure.” This text is just not targeted on highlighting the demise of particular person high-profile fintech startups or varied failed fintech initiatives undertaken by massive companies (equivalent to BloombergBlack or UBS’ SmarthWealth).
These concepts rolled out with hype and momentum, however they in the end failed to alter the way in which the typical particular person manages their cash.
Fairly, this piece will give attention to fintech concepts that acquired some extent of preliminary hype and momentum, however in the end failed to alter the way in which the typical particular person 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 normal strategy 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 traits. Day-after-day, customers store on-line and pour over consumer evaluations. The logic behind this early wave of startups was that the expertise of discovering a monetary advisor ought to mimic the way in which customers search for different services on-line.
Monetary advisor matchmaking startups typically took certainly one of two approaches. The primary strategy was to supply a search software that permit customers discover native monetary advisors based mostly on parameters equivalent to property below administration, expertise, score, gender, and so forth. 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 strategy was to supply an internet monetary advisor matchmaking service. Prospects have been requested to enter primary details about their revenue, age, property, wants, and so forth. and the agency would introduce them to an area monetary advisor who was chosen as a customized match for his or her wants.
As of 2023, there are nonetheless just a few impartial websites (equivalent to Sensible Asset and Zoe Monetary) providing some form of monetary advisor matchmaking software. And naturally, Googling “monetary advisors in my space” will yield paid advert placements. On the whole, nonetheless, impartial monetary advisor search and matchmaking instruments didn’t go mainstream. Most rich people nonetheless discover their monetary advisor by way of conventional strategies somewhat than counting on web-based approaches.
This concept didn’t catch on for 2 causes. First, these startups have been unable to beat the issue of constructing a two-sided community for a product with a sluggish gross sales cycle. Advisors didn’t wish to be a part of these matchmaking providers until there’s numerous customers on the platform. With no important variety of advisors on the platform, nonetheless, these providers struggled to draw customers. This chicken-or-the-egg drawback was compounded by the very sluggish gross sales cycle of monetary recommendation.
Secondly, monetary recommendation is essentially totally different from different forms of items and providers offered on-line. There are doubtlessly large unfavorable penalties if a client chooses the flawed monetary advisor they usually obtain unhealthy funding recommendation. Ordering a pizza or a pair of footwear on-line doesn’t carry the identical stage of danger.
Customers who want 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.
