In recent years, working for, or banking with, a traditional financial institution was decidedly uncool. Far cooler was working for or banking with one of the many fintech startups that seemed to thumb their nose at stodgy bank brands.
Then the Federal Reserve hiked interest rates, stocks tanked and a lot of fintech outfits that appeared to be doing well began looking far less hardy and hale. The question begged now is whether fintech as a theme has lost its mojo.
According to Lightspeed Venture Partners’ Mercedes Bent, Felicis’ Victoria Treyger, and Cowboy Ventures’ Jillian Williams, the answer is a resounding “no.” However, during a panel discussion hosted by this editor late last week in San Francisco, the investors were forthright. Led by moderator Reed Albergotti, technology editor of the news platform Semafor, all three acknowledged the industry’s current challenges while also outlining opportunities.
On the challenges front, startups and their backers clearly got ahead of themselves during the pandemic, Albergotti suggested, observing that fintech was “going gangbusters” when “everyone was working from home” and “using lending apps and payment apps” but that times have turned “tough” as COVID has faded into the background.
SoFi is down, he explained. “PayPal is unavailable.” He brought up Frank, the college financial aid platform that JPMorgan acquired in the fall of 2021 by blatantly lying to the financial services behemoth about its user base. “They don’t really have 4 million customers,
Williams agreed but said there are positives and negatives for fintech right now. On the positive side, she said, “from a consumer standpoint, it’s still rather early days” for fintech startups. She said that “demand and desire from the consumer” still exists for new and better alternatives to traditional financial institutions based on available data.
