Fintech Thought Leader: 5 Reasons Why Fintech Marketplace Is 'The Worst'

Fintech entrepreneur and co-founder of Gold Bullion International Savneet Singh explained in a post on Medium.com the unique challenges of developing a transformative fintech business.

“FinTech is really hard and the hubris I see in entrepreneurs and investors entering the space makes me worry that people have no idea what they’re getting into,” Singh writes.

Here’s a look at five reasons why Singh believes breaking into the world of fintech is more difficult than it may seem.

1. Fintech businesses don’t scale quickly. In fact, Singh points out that all the loans originated by LendingClub Corp LC, SoFi and Prosper combined don’t come anywhere close to the amount of lending that top U.S. banks are doing.

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2. Early adoption can be misleading. Many fintech startups provide a product or service that is exactly what a handful of initial clients need only to find out years later that those handful of clients make up nearly the entire market for the product or service.

3. There are a relatively small number of fintech buyouts. Although there has been relatively strong growth in the space, a buyout is not a realistic outcome for the vast majority of startups.

4. Sale cycles are extremely long. Lots of time, energy, money and potential opportunities to innovate are wasted waiting for feedback from large companies.

5. There are no shortcuts to customer acquisition. Fintech companies have some of the highest customer acquisition costs in the business world, and they even tend to grow over time.

Disclosure: the author holds no position in the stocks mentioned.