Aug 22

How Fintech Startups Can Democratize Financial Services

Access to digital technology is allowing financiers to tap into various lucrative industries but when did this begin and how is it expanding? Moreover, how can fintech startups make financial services (of all kinds) accessible to everyone easily?

Fintech development began a few decades back when financial companies realized the potential of technology to optimize support processes and actively achieve coherency within firms by integrating it further. Soon after the integration, financial companies shifted their emphasis to optimizing the industry further by improving and smoothing out consumer-focused tasks. Think PayPal.

The shift from integration to optimization brought about the emergence of innovations like PayPal & Skrill to help consumers with their everyday activities of buying, spending and transferring money across.

Was it useful then? Yes.

Is it useful now? Big YES.

So, what do you think happened next? Well, “next” is now…

Fintech startups are no longer working on making everything faster, safer and effective (because they have already achieved that) but are now looking to expand the traditional services of banking so it can reach consumers beyond those who are wealthy.

Fintech startups are democratizing financial services at an exponential rate. Let’s look at ‘how’ they are managing to achieve this. As an example, think of your smartphone as a bank and the apps as Fintech startups.

Your smartphone is quite useless without apps to do various things like reach your friends and family via WhatsApp, send emails via Mail apps or catch up with your work through Slack.

What these apps are doing is catering to a particular problem or focus area that runs on the phone. However, the phone manufacturer is a device builder, not an app developer. Just like a phone manufacturer cannot build lucrative apps, financial institutions (such as banks) cannot build technology solutions. The success of a bank now depends heavily on the Fintech startups providing various financial services.

This is where the democratic nature of financial services comes in. One can pick and choose the applications for financial services that one wants, rather than accept the default apps provided by the phone (or not).


There are essentially four ways to democratize financial services.

  • P2P Value Exchanges
  • Machine Learning Apps (Robo-advisors, AI bots, etc.)
  • Data-Driven Services
  • Merging of physical with virtual (IoT, smart devices for payments)


The first and foremost is Peer to Peer or P2P value exchanges – these are safe, cheap and quick. Think Kantox and TransferWise. Solutions such as these are growing fast, catering to individuals and businesses and lowering the transfer cost. Intermediary institutions cannot interfere if the P2P value exchange is taking place and hence reducing any added delays & cost of transfer.

Other great examples would be Bitcoin and Blockchain applications, Venmo, Xoom, WorldRemit, HiFX, CrowdFunding and many others, etc.


Machine learning apps were developed to get people to start doing things themselves. The DIY culture is what a Robo-Advisor is but from the company’s viewpoint enhanced.

With AI bots and Robo-advisors, an automated system is out there that is helping guide people through a process. This method to automate an initial stage cuts down the cost of keeping a paid advisor for menial tasks. On top of this, AI can help set goals and asset allocation via a computer algorithm. Not eliminating the human factor completely, some areas do require human assistance, and in that situation, a person is available to help.


Think car insurances – hold this thought.

Technology can help draw value from data; destructive in the wrong hands but effective in the right ones. Telematics is used by financial services to analyze a credit risk and assess who can borrow money.

Car insurances are hence a great example because their telematic apps allow insurance companies to monitor driving habits and slash bills.

Data driven services are also used by home insurance companies, health insurers, and supermarkets to offer deeper discounts to people who seem less risky.

If an institute has a limited access data pool or has a poor analyzing technique, it may find itself at an increasing disadvantage.


In simple words, it is the blurring of lines between machine and technology.

Like mobile banking reformed payments, the Internet of Things has what it takes to go one step further. Paying for a train ride through wearable tech is already a reality in Singapore, and very soon filling your gas, purchasing groceries and paying for dinner will all be part of the seamless payment system.

How people want to live and work will have a significant impact on how many solutions financial services deliver and through which fintech startup. It is only a matter of time before the fintech marketplace will be overrun by too many players offering more or less the same services. Today, however, it is full of opportunity.