[Editor’s note: This is a guest post from Charles Moldow, General Partner at Foundation Capital. Foundation Capital is a bronze sponsor and will be in attendance at LendIt USA 2015 on April 13-15. In this post and linked white paper, he talks about the next big ideas in financial technology..]
Let’s face it, today’s financial institutions are failing us. In fact, when it comes to financial services, there are just two things to remember. First, banks are inefficient. McKinsey’s latest review of global banking illustrated that just 30 percent of top global banks improved cost efficiency over four years. The remaining 70 percent stayed the same or became less efficient — all despite leaps forward in mobile technology, cloud computing, and web platforms.
And second, banks are unloved. A Viacom survey showed that many millennials are ready to give up on banks. More than 70 percent actually prefer a trip to the dentist and nearly half expect (and hope) that tech startups will reinvent banking.
Inefficient and unloved is not generally a recipe for success. Yet in a world where other financial service options simply don’t exist, neither is it a recipe for complete failure. That is no longer the world we live in today. A new cohort of companies is poised to revolutionize the financial services space across all types of transactions—payments, wealth management, personal investing, loans, and insurance.
It’s in this moment, when our traditional banking and financial services seem not only too big to fail but also too slow to react – that emerging technology companies will have significant opportunities to innovate. In my new whitepaper, “The Next Big Ideas in Financial Technology,” I identify and delve deeper into the four key consumer trends that will best position companies to disrupt or even displace the financial services incumbents. Simplification, Transparency, Analytics, and Reducing Friction will be the keys that unlock a new wave of customers who expect more from their financial service providers. And this generation of the intentionally unbanked will seize upon these new platforms to improve and simplify their lives and save them money.