10 years of fintech failure: 3 more ideas that failed to live up to the initial hype

This article follows In the first decade of fintech, he looked at six fintech ideas that failed to go mainstream – algorithm-based buy/sell/hold advice, trading simulation, P2P lending, P2P insurance, on-demand insurance and autonomous financial planning apps. But there is more to the story. Given the high interest in the fintech sector, it’s worth examining three more concepts that seemed promising at first, but largely failed to transform the financial services industry.

Before we dive in, it’s important to redefine how we define “failure.” This article is not focused on highlighting the demise of individual high-profile fintech startups or the various fintech startups run by large corporations (such as Bloomberg Black or UBS Smart Wealth).

Instead, this section focuses on fintech Thoughts It gained some initial impetus and momentum, but ultimately failed to change the way ordinary people manage their money. So, with those caveats, here are three more fintech concepts that have failed fintech over the past decade.

Independent financial advisor search and matching tools

In the early 2010s, about 15 firms launched online search or matchmaking services designed to help individuals find a financial advisor that best suits their needs. The traditional approach to financial advice – active sales pitches by wealthy individuals, often through friends, family or a local financial advisor – is behind modern online product search trends. Every day, consumers shop online and pour user reviews. The logic behind this early wave of startups is that the experience of finding a financial advisor should mimic the way consumers search for other products and services online.

Financial advisor matchmaking startups generally take one of two approaches. The first approach was to provide a search tool that allowed users to find local financial advisors based on parameters such as assets under management, experience, rating, gender, etc. Here is an example of a financial advisor profile on the now defunct financial advisor search tool, Tipbob.

2013 Financial Advisor Profile Screenshot by tipbob. Image: Greg Easterbrook

The second approach was to provide an online financial advisor matching service. Prospectives were asked to enter basic information about their income, age, assets, needs, etc. and the organization would introduce them to a local financial advisor who was personally selected for their needs.

In the year As of 2023, there are a few independent sites (such as Smart Property and Zoe Financial) that offer some financial advisor matching tools. And of course, Googling “financial advisors near me” brings up paid ad placements. In general, however, independent financial advisor search and matching tools have failed to go mainstream. Most wealthy individuals still find their financial advisors through traditional methods rather than relying on web-based approaches.

This proposal failed for two reasons. First, these startups cannot overcome the difficulty of building a two-sided network for a product with a slow sales cycle. Mentors don’t want to join these matchmaking services unless there is a large number of users on the platform. But these services have struggled to attract users since there aren’t many advisors on the platform. This chicken-or-egg dilemma is compounded by the slow financial advice sales cycle.

Second, financial advice is fundamentally different from other types of goods and services sold online. If a consumer chooses the wrong financial advisor and receives bad investment advice, there can be serious negative consequences. Ordering a pizza or a pair of shoes online doesn’t carry the same level of risk.

Consumers looking to work with a financial advisor seem to only want to hire someone with a high level of personal trust. Thus, the financial advisor’s business model, which has fueled online product search and many other industries, has proven resilient to the disruption of comparison services.