What do all of these questions have in common? Well, I spent yesterday attending the Finovate conference finding that out. The conference has a similar format to DEMO but for the ‘financial technology’ space. Overall, 30+ companies presented for 7 minutes each. While there were more ‘features’ than companies there were some intriguing services. Interestingly, there was a void of companies in the B2B payment space and vertical payments space.
In case you're interested, here were the highlights:
-There were 3 types of companies that presented at the conference (personal finance, p2p lending and lead gen variants).
-There were several personal finance companies that have sprung up over the last year after Mint received so much publicity. Other companies in the space include Wesabe, Rudder and Green Sherpa. Basically, this space seems overly crowded at this point. Mint says they are signing up 25k users per week purely on word of mouth. Will it last without some major distribution partnership?
-The P2P lending space (Lending Club, Pertuity Direct, Prosper) is also crowded. The big news at the conference was that Prosper emerged after a six-month quiet period to register their platform with the SEC. Prosper has re-opened to borrowers in all 50 states and lenders in California. Currently, Lending Club and Pertuity Direct are the only two p2p lending platforms available to most investors throughout the United States. Prosper's model is different because, among other things, loan rates are determined by an auction among lenders.
-Lead gen models were prolific amongst this crowd. Interesting companies using this model include Mint, Credit Karma, and BillShrink. The interesting thing is that these companies have created products that offer value to the user. They have turned the slimy lead gen model on it’s head by thinking about the user first.
One of the most difficult problems amongst all of these startups continues to be distribution. In a space that isn’t viral and SEO/SEM is very difficult, startups are looking at ways to build traffic. Hence, there were several announcements of white label solutions and integrations with larger players. I doubt most of these companies will be able to build up enough traffic...fast enough...without these traffic partnerships.