3 Reasons Why Naysayers Think That Fintech Is in a Bubble (Infographic)

The financial technology, or fintech, sector raised $60 billion in 2017, as shown in the infographic presented by (Carsurance.net). It was a different story in 2008, though; fintech startups across the globe only attracted less than one billion dollars’ worth of investment

Despite fintech’s productive and prosperous decade, some people are still not sold on its sustainability. Naysayers may represent the minority, but their claims aren’t completely unfounded.

Here are the main reasons why some experts believe that fintech is a bubble waiting to burst:

1. Investor Impatience

A report from KPMG International and CB Insights reveals that there are investors growing impatient with the feasibility of some fintech solutions.

Although investors understand that the process from proof-of-concept to production doesn’t happen overnight, some of them are unsatisfied with the extensive time a few startups use to prove their worth.

Furthermore, some promising fintech companies remain unprofitable despite their great potential because they keep on reinvesting their revenue. As a result, some investors have become more selective in choosing startups to finance.

2. Startup Saturation

Ingenuity is the catalyst for the fintech sector’s strong momentum. Many startups, however, still struggle to find buyers. The market is becoming saturated of underachieving tech companies.

Make no mistake about it, traditional financial institutions are adopting fintech solutions. The problem, though, is that the major players have yet to fully embrace what the innovators have to offer.

An atmosphere conducive to collaboration between legacy banks and fintech startups needs to exist. The good news is that more partnerships are expected to be forged in the coming years due to the competitive pressure felt by industry laggards

3. Miscommunication

Speaking of collaboration, there’s a still disconnect between banking execs and young technologists. They tend to talk about the same things in different languages. It appears that some partnerships lack synergy between the two parties, which may harm both sides.

As always, communication is the key. Unless traditional banking firms and innovators learn to be on the same page constantly, the fintech sector’s current success might actually prove unsustainable.

The fear of a fintech bubble isn’t a new sentiment. It has yet to come true, but it isn’t going away either. Only time can judge whether fintech is really nothing but hype or not. For now, let’s look back in history with the infographic below to find clues about the future fate of this sector.

The fear of a fintech bubble isn’t a new sentiment. It has yet to come true, but it isn’t going away either. Only time can judge whether fintech is really nothing but hype or not. For now, let’s look back in history with the infographic below to find clues about the future fate of this sector.

Originally published at: https://carsurance.net/blog/growth-of-fintech

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