July 16, 2017
It’s the dead of summer (or winter depending on where you are in the world) but it feels a bit like spring this week in FinTech. The opportunities in the industry seem endless as more and more people focus on a unique problem in the industry. Many in FinTech are helping digitize old processes, making them easier and more customer-friendly, while others are blazing a whole new path based on the latest technology. This week, we take a fresh look at the beginnings of a shakeup in real estate and mortgages, a revolution (not evolution) in payments (Zelle), and another huge crowdsale to bring us closer to a blockchain-based future (we think).
"The prize, if they succeed: A share of the $8.4 trillion U.S. mortgage market.
It should not be a surprise that the products & services in the financial services industry continue to fragment. Entrepreneurs are like bloodhounds; they sniff out any opportunity where customers aren’t being served as well as they should. You can bet your last dollar that an industry described as running on legacy technology for decades and having a trillion-dollar market size will not be lacking challengers.
If you’ve ever gone through the process of getting a mortgage, it feels much more like a combination of a painful, personal investigation of your life, your finances, and ability to provide endless amounts of documentation without quitting. What interesting about some of the new mortgages players isn’t the digitization and customer experience improvement of mortgages, that’s a given, but rather the unique go-to-market strategy based on the customer, not the mortgage itself. For example, Landed is focused on helping educators buy homes, and Clara Lending layer[s] on financial education for prospective borrowers. We’ll see how long banks and current mortgage companies can keep their share but transforming a company’s culture to be completely designed around the customer is easier said (and marketed) than executed.
Even after knowing what Zelle is, you may still be left wondering why it really matters; after all, it’s nothing fundamentally new.
We at LTP always appreciate when someone cuts through the noise of FinTech which is an industry that is particularly noisy. It was great this week to have a succinct primer on Zelle and, most importantly, why it matters (even the title is crystal clear!). So stop and read the article, I’ll wait.
As Scott states, payments and Zelle aren’t anything totally new. However, the branding, integration, and go-to-market strategy of Zelle is something new and necessary for incumbent banks. It’s required to keep up with customers’ expectations and the never-ended FinTech challengers. There’s an important lesson in Zelle for anyone in financial services: while it may technically already have the product and capabilities, customers will never be in the market of selecting the financial services product that can technically do the job (clearXchange already existed). Customers will always be in the market of finding the products that help them pay their friends, buy their house, and let them focus on making progress in their lives.
The success of the Tezos fundraiser points to the willingness on the part of investors and speculators to throw their support behind...whole new protocols as well.
This story is your weekly reminder that there are plenty of even crazier things happening in the world of FinTech outside of digital transformation. It should go without saying that a company raising $232 million completely outside the traditional financial services ecosystem should make everyone pay attention. Regardless of how you feel about the viability of Tezos, it’s important to keep an eye on how token sales, ICOs, and cryptocurrencies, in general, will impact the global financial services sector over the years. Yes, it is early days. Yes, it is the Wild West. Traditional financial services aren’t in imminent danger; however, there is no stopping the momentum of blockchain technology as a new protocol for trust, transparency, and connecting networks of people across the world without a third party. That makes for a powerful combination and everyone should keep tabs on it. Don’t worry; we’ll continue to keep tabs on it for you!
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See you next week!