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Fintech Innovations That Failed to Deliver on Their Hype Over the Past Decade

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As the fintech industry continues to evolve and grow, it’s essential to acknowledge that not every idea will succeed. In this article, we’ll explore four examples of fintech ideas that didn’t go mainstream and what can be learned from their failure.

Trade-mimicking Services: A Lesson in Overestimating Consumer Enthusiasm

Over the last decade, numerous fintech startups launched products allowing consumers to automatically copy the trades of top traders or hedge funds. The idea was to democratize finance and give smart traders an opportunity to shine even if they didn’t have Wall Street connections.

However, as of 2023, most investors still primarily use large, established financial brands to manage their money. While some trade-mimicking firms, like BOTS, have been relatively successful, the model has yet to go mainstream.

Fintech Must Remember: The Average Consumer Doesn’t Like Thinking About Money

Looking across these four examples of fintech ideas that didn’t succeed, there are two main takeaways:

  1. Fintech must remember that the average consumer doesn’t like thinking about money and often wants someone else to take care of it.
  2. The industry must be realistic about the cost of client acquisition and how difficult it is to get consumers and investors to move money to platforms.

Why Fintech Startups Failed: A Look at the Four Examples

Trade-mimicking Services

  • Overestimating consumer enthusiasm for personal finance
  • Difficulty in keeping users engaged and paying fees month after month

Fintech Must Remember: The Average Consumer Doesn’t Like Thinking About Money

  • Most people don’t devote sufficient attention to their financial lives
  • Established financial industry has caught up, offering customers free financial planning and/or budgeting tools

Peer-to-Peer Lending

  • Difficulty in getting consumers and investors to move money to platforms
  • Overestimating the average consumer’s enthusiasm for personal finance

Trade-mimicking Services (Again)

  • Same reasons as above, including overestimating consumer enthusiasm for personal finance

Conclusion

Fintech can’t afford to forget the lessons from its first decade. By acknowledging and learning from these failures, entrepreneurs can create more effective products that cater to the needs of their target market.

The average consumer doesn’t like thinking about money, and fintech must be realistic about the cost of client acquisition. These are crucial takeaways for the next generation of fintech startups.

Related Topics

  • Fintech
  • Financial planning
  • Peer-to-peer lending
  • Trade-mimicking services

About the Author

Grant Easterbrook is a fintech consultant based in Amsterdam. He also co-founded Dream Forward, which was acquired in 2020.

You can follow Grant on LinkedIn.

This article is part of our Fintech column. You can find more related stories and analysis by following the topic.

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