Financial technology (fintech) darlings Lending Club and OnDeck have lost more than half of their value since their IPOs. Writedowns have inspired two reactions in executives at financial services firms: smugness and the killer instinct. Digital skeptics feel vindicated, while digital aspirers want to make acquisitions on the cheap. Both reactions are dangerous. This report explores what fintech trouble means for digital business strategy professionals at financial services firms and recommends how they should respond.
Devaluation Reaches Fintech
Fintech unicorns have proliferated. Now investors are asking how many of these firms can live up to their inflated valuations. Their conclusion: not many. As a result, markdowns and stock-price collapses have begun.
They may not be worth a billion dollars,but some fintech startups have uncovered new opportunities within financial services. Incumbents need to consider these and respond by partnering with or buying startups, or by building similar capabilities.
Welcome To The Havoc Stage
Devaluation among fintech firms will start a race among incumbents to pick up digital capabilities on the cheap — and will expose them to the risk of making poor acquisitions. Many will wake up after the shopping frenzy with buyer’s remorse.
This is an interesting assessment by Oliwia Berdak of Forrester Research. You can order the report at Forrester Research