Drew
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Drew in Just my thoughts,

Is the Fintech Sector a Bubble?

Whether it’s my age, demographic, spending habits or some combination of the three, I can’t seem to go anywhere on the internet without getting bombarded by an ad for Betterment, Wealthfront, Personal Capital, You Need a Budget or Lending Club (NYSE:LC.) They all must have huge marketing budgets and great, if somewhat creepy, ways of keeping tabs on 28 year olds who are just now getting some money to invest. I actually have been trying out You Need a Budget and really enjoy it. It’s taught me that taking Uber’s to go a few blocks because it’s raining outside is probably not the most financially sound decision. Which I guess a three year old could have told me and I didn’t really need fancy software. But I'm getting off track.

The point is that it seems like the Fintech space is getting awfully crowded. And while there have been companies that have made huge breakthroughs like Lending Club, it just seems to me like a bubble waiting to pop. I mean, how many robo-investing companies can possibly be worth a billion dollars? And what will the ramifications be for the industry as a whole if many of them fall by the wayside, thus making investors more hesitant in the future? I don’t want to be a part of the dystopian future where the banking system as it stands today wins out because these fintech companies either couldn’t deliver what they promised or cannibalized each other.

Regardless, it makes it a trick situation in terms of the average consumer picking what horse to back. Most people are wary of giving up their financial information, so if they do so and then the business goes down in flames a few months later, will they be willing to do so again? This bubble, if it is one, could have far reaching effects on how our financial system operates.