The AltFi view on entrepreneurialism: Fintech is at risk of becoming bland

By AltFi on Monday 22 February 2021

Alternative LendingDigital BankingSavings and Investment

Safe is the new risky, and that’s terrible news for fintech’s future.

The AltFi view on entrepreneurialism: Fintech is at risk of becoming bland
Image source: AltFi.

Blame it on the recession, coronavirus, or just a maturing of the industry, but fintech is becoming a bit bland.

No, we’re not talking about the brilliant startups, talented employees, inspiring leaders or phenomenal funding rounds... we’re talking about the business models of fintech.

Think:

  • Neobank launches subscription service,
  • SME banking plus accounting,
  • Open banking provider launches payments,
  • Buy-now-pay-later.

There’s a growing sense of convergence around a very similar set of business themes and revenue-generating models. 

Follow the money

This convergence is unsurprising for two reasons.

Firstly finance is fundamentally always about saving, lending, investing or payments, just chopped up in different ways.

But secondly, unicorns like Revolut, Starling Bank, Plaid and Klarna have ‘proven’ that these business models work (or appear to work).

They’re certainly the companies raising the most money and garnering the most attention.

The ripple effect is that the smart money—whether VC, institutional or angel—is increasingly predisposed to favour this subset of fintech business models.

Founders and entrepreneurs, keen to get their nascent ventures off the ground, follow that money and end up mirroring each other’s models—albeit in different geographies or with cosmetic differences.

Here’s to the crazy ones...

At the company-level, there’s nothing wrong with being commercially-minded and copying the best ideas or concepts from peers, but zoom out to an industry-level and this convergence risks making fintech all feel a bit… safe.

Where are the big ideas? The novel concepts? The disruptors? As Steve Jobs put it in Apple’s famous ad, where are the “crazy ones”?

Roll the clock back to the mid-2010s, and you’ll find them. Who could forget Myra, the in-car voice investment assistant, or FingoPay’s vein-mapping payments?

And maybe we’re too harsh, painting everyone with the same brush.

Rental deposit loans from Fronted, a bill-splitting credit card from Tymit, or the very quirky personality-based financial advice service Quirk today are all brilliantly bonkers businesses.

We rather agree with Revolut’s CEO and co-founder, Nik Storonsky, who said just over a year ago that “fintech is just getting started”.

Europe now has more than 14 fintech unicorns, something to be celebrated and proof that fintech meets real consumer and business demand. 

In their very early days, each of these companies’ central goal would have sounded ‘quirky’, eccentric even.

VCs and others hopefully still recognise this and back bold ideas.

Let’s not lose sight of fintech’s quirkiness.

The AltFi Leader is a new weekly view for 2021 from our editorial team. We’d love to hear your ideas, thoughts, feedback and constructive criticism: editorial@altfi.com

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