It isn’t always the most innovative products or ideas which lead the market. Sometimes the market is not ready and market development is necessary. This is essentially a push from the developers’ side. More often than not, innovation is driven. Pulled and accelerated by consumer need. FinTech is of the latter variety. There are several pull factors, but many can be rooted back to trust.
To trust is to hold a “belief in the reliability, truth and ability of another”. When banks and financial services do not lend or provide sufficient returns their abilities are questioned. According to the Edelman Trust Barometer financial services and banking hold some of the lowest levels of public trust. Technology on the other hand, with its reliance of transparency and focus on ease of service, is the most trusted sector.
FinTech (more specifically its second generation: Disruptive FinTech) has been the product of both this distrust of financial services, and trust in technology. It has provided a reliable alternative. Incorporating the transparency which its proponents — Generation Y — are comfortable with and bringing ease to money transactions. But it must learn from the mistakes of the previous cycle. FinTech firms need to do more to inspire and build on that initial trust. It cannot expect to continue to grow past on past expectations.
Already, there has been a noted dip in public trust in technology. Data losses and criminality have contributed to the low trust and poor adoption rates by the public in cryptocurrency. Though a growing industry now, the FinTech sector will one day begin to consolidate. Consumers will be selective in whom they remain loyal. The FinTech winners will not be the most innovative or disruptive firms. The only decisive factor between the new industry titans and ‘has-beens’ will be trust.