3 major factors that drive fintech startups



There are many who are eager to know about the future of financial technology. In the fag end of 2015 saw a major drop in the investments into fintech companies, which fell by around 20%. This drop is said to have coincided with share prices plunging of few publicly traded companies within the domain. Although the staggering numbers felt to suggest of the bubble burst, fintech startups still seem to continue to be among the biggest threats posed to those well established financial institutions.
Three compelling reasons for funded Fintech companies in Germany to head the market
Fintech companies have been compelling the traditional banks and financial institutions to work more harder and to become more consumer friendly. The three major reasons for its emerging and being termed as an increasing competitor is given below:

·         The largest tech players entering the market: Those innovative firms which had made efforts to transform social networking and communications are placing significant efforts and sources to be part of the emerging fintech market. Facebook, for example, had introduced peer to peer payment feature, thus enabling users to send money to friends through its Messenger Platform. Access to this feature for all users is free! Snapchat, 

    the popular social app was found to be developing algorithm to help its users to create and implement custom investment strategies to plan their retirement. The features also enables its users to come up with financial investment purchases with the single click of the app. Banks are likely to find social networks which has been entering the fintech domain to be a major concern, as such platforms do have highly engaged and huge user bases. For example, Facebook has 1.44 billion active users monthly, while Snapchat has 100 million.

·   Young people considered to be the driving growth: The early adopters of Fintech are considered to be the very people who are required as customers by banks, namely the millennial. Hence, the social media platforms do find the opportunity towards delivering financial services, which is quite amazing as well as potentially disruptive. 

   This is more so due to its capability to engage the emerging millennial customer. Why recently funded Fintech in Germany and other countries are preferred by millennials? Most of the startups do have mobile first mentality. 

     According to reports, mobile banking transactions have only increased manifolds in the recent years and are expected to rise further. The young millenials prefer fintech when compared to the traditional financial institutions and banks. They have a greater trust upon tech firms who can handle their precious money much better. Millennials are expected to have greater purchasing power in the coming decade. Hence, if they prefer fintech platforms over the traditional financial institutions, then banks are likely to lose dollars in billions in the future, unless it comes up with plans that are millennial friendly.

·         Fintech startups do boast of mammoth venture capital funding: With huge amount at their disposal, the fintech companies can innovative and also put their resources to market their varied products.

Therefore, fintech companies are growing in strength and do pose a greater challenge for the banks, prompting them to become innovative.

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