Why do fintech startups thrive during times of crisis?
When faced with things we can’t control, it would be reasonable to expect humans to cling to those things they can recognise. But, at least when it comes to our financial habits, that doesn’t seem to be the case.
Historically, economic crises seem to correlate with the uptake of financial innovations. And so far, COVID-19 is proving no different.
Tech companies such as eBay and PayPal — both pioneers of e-commerce — survived the dot-com bubble and went on to thrive as consumers warmed to the idea of paying for products online.
But, it was the 2008-09 global financial crisis that is often hailed as the dawn of fintech.
Firstly, the crisis brought on a swathe of regulatory reforms, meaning tech companies no longer had to adhere to an antiquated rulebook.
Second, people were starting to spend more time online, and social media platforms and well-designed websites were making the web an appealing place to be.
And finally, the financial crisis crushed consumer trust in bricks-and-mortar banking institutions almost irreparably.
The years that followed saw the birth of some of the biggest names in fintech today.
In 2009, Venmo was founded, and Twitter founder Jack Dorsey created Square. Bitcoin also made its first appearance, and Kickstarter introduced us to crowdfunding.
Stripe was founded in 2010, and in 2011, Transferwise came along, cutting banks out of the money transfer process.
Yet somehow, it wasn’t until 2015 that JP Morgan chief Jamie Dimon famously warned that “Silicon Valley is coming”.
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