Fintech 101
Fintech is changing the way we invest, borrow and save. It may only represent a tiny fraction of financial markets worldwide but it is growing every year.
A recent Forbes article pointed to an Accenture study which found that “$27.4 billion poured into fintech startups in 2017.” Clearly the fintech market is growing fast as both accredited and non-accredited systems are exploding.
We can also thank its rise to the passage of Regulation A+, which enables small businesses to raise up to $50 million in a 12-month period using a “public solicitation” of its shares with the offering exempt from SEC and state securities law registration. This makes it much easier for a good idea to get off the ground, and will certainly add to the expansion of fintech-related products.
It’s already touching many industries. And more importantly, giving access to investments and more opportunities that were only traditionally available to large businesses. Although it’s not quite to the point of public consumption, it’s creating a democratization of investing—and that’s a good thing.
As with anything new and exciting, there are some areas of concern. For example, these platforms could go out of business and temporarily strand assets. You may not legally be protected if the thing you’re investing finds itself involved in a lawsuit. There’s also a serious lack of diversification with some of these platforms. But it’s certainly fun to watch unfold.
Even if you aren’t interested in investing, here are some examples of fintech companies that you should know about:
P2P (Peer-to-Peer) Lending
There are already several direct-to-consumer lending platforms out there, such as Propser, Upstart, Lending Club and Avant. This kind of P2P lending enables you to lend a little to a lot of different people.
They “develop and manage solar investment funds.” How? Solar installer partners submit loan applications, Wunder identifies the most stable projects, accredited investors invest on the Wunder portal, projects are brought online and investors receive monthly returns. There are no known competitors, but it does have a similar profile to an annuity. Just take note that your investment is not insured; The money that you invested is locked up and may take a while to get back.
It’s a B2P real estate investing platform with an eBay-esque style. As an investor, you’ll learn about property and about the individuals or company doing the flip. Then, instead of buying the physical house or property, you’ll gain part or equity or invest.
This is just the tip of the iceberg. For me, I see these opportunities as a way to diversify (and be in complete control of) my retirement plan. Others are looking forward to its automation, diversification and aggregation capabilities. Forbes is already making predictions for fintech trends we’ll see in 2018. Only time will tell where this industry will go.