Over the past few years, fintech has grown by leaps and bounds. Fintech essentially covers online lending companies that act as alternative financiers from usually entities including banks and public institutions. While the fintech industry has increased, alot of uncertainty has surrounded it. The main issue is the lending to businesses that can be defined as “risky” due to the smaller lending amounts and sometimes short history in business. Nothing proved the risky nature of the industry than 2016.
According to Entrepreneur, in 2016 “Two prominent fintech companies saw their market valuations drop. One small-business lender abruptly stopped issuing loans temporarily due to performance issues, while another was forced to shut down.” The rough nature, while alarming, should not be an end game scenario, at least not yet. Consider this fact; companies like OnDeck were founded in 2007, yet the term Fintech wasn’t widely used until about 2014 per wikipedia. The industry is still being determined and the the current jocking for position is normal for any new market still understanding itself.
The need for alternative lending is certainly present within the current business climate. Add the ease of technology access and this market makes complete sense. The issue for 2017 will be offering more unique products to help smaller operations run their business and grow. Creating a new source of lending is always tricky whether you’re a bank, government, or individual investor, but the future of fintech looks extremely bright within the current and future global climate.