With $19.1 billion invested in fintech companies in 2015, investors are beginning to question the true value of companies categorized as fintech. The term fintech has been used to describe a wide range of companies. Subprime lenders that state that fintech can lower default rates is one area of concern by investors. An example of this is Elevate Credit and LoanDepot. Both companies sought to go public, but pulled their I.P.O.s due to concern from investors in the true value of the companies.
The rapid investment in fintech can be compared to the “.com” bubble of the early 2000s. Within the industry there is a mix of financial companies utilizing technology and technology companies that are in finance. The main area of concern for investors is the worry that companies are categorizing themselves as fintech in order to appear more attractive. Overall, fintech is a relatively new industry and it is time that will aid investors in determining the true value and category that fintech belongs.
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It’s interesting that many of the articles regarding FinTech seem to alternate between, “FinTech is the future,” and, “Why FinTech has failed to Disrupt.” This may be due to how fast technology moves (what was a hot FinTech trend six months ago may now be obsolete), or it could just be that people/investors/media don’t have as much patience anymore and need to see immediate success for something to be deemed, “attractive.”