Want to be a FinTech Startup? Here are 10 Things to Consider from Ron Suber

At this year’s NJ Tech Council FinTech Conference, held in September in Jersey City, Ron Suber, president emeritus and senior adviser at Prosper (San Francisco), a FinTech lending startup, spoke about the future of FinTech and the opportunities for startups getting into the area now.

Here are some of the points he made:

  • Innovation cycles are 50-year events, and it doesn’t matter what the product is or the industry. The FinTech field is now on the upside of that cycle.
  • Incumbents are trying to figure out the market. For example, Amazon, Google and even Berkshire Hathaway are getting into the insurance business.
  • “This is your opportunity in FinTech and financial services today. You have a couple of years to figure it out and get into the minds, hearts and wallets” of your customers, before someone else gets there, or buys your competitor, or “some new group comes out of Boston or Singapore to jump over you to get to the end of the innovation cycle.”
  • Walmart is figuring out that buying Jet wasn’t enough. They wanted to start a bank. “Then they realized how hard that was, how capital-intensive and expensive it would be.” Now Walmart is working with the second-biggest Chinese internet company for a reason. Watch them, he advised.
  • Telecoms, banks and insurance companies are fighting back in FinTech. So are tech companies. “You’ll see a lot more equity and debt transfer deals because tech companies don’t want banking stuff on their balance sheets or to be valued like a bank.”
  • In blockchain, the big winners will be the “pick-and-shovel” companies that leverage blockchain currency.
  • Blockchain is what’s coming next. “We will have all the trust and transparency of everything in your life in a distributed ledger, including the art you buy, the diamonds you have and the securities you buy. You will have the keys to the information. Blockchain will affect how contracts, legal documents and payments are done.”
  • This is now the “Big Bang” moment in artificial intelligence (AI). “We see State Street and other banks buying AI companies because they want to take all those people in the call center and turn them into bots, using alternative information and intelligence.”
  • Startups have an opportunity in FinTech because the customer is evolving. Much as Spotify killed Apple Music and Pandora, startups can get in there and disrupt. People in their ’20s want something different. In response, capital markets are changing, data is changing. “It’s your job to understand all the pressure points.”
  • If you are running an innovative FinTech company and raising funds, you will not only have to explain what you will do with the money, but also how you’ll be able to deal with the pressure created by this next generation. Remember, the children of traditional customers don’t even enter banks, except to get a roll of quarters.

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