Rise of Fintech Companies in USA
Fintech companies providing products and services built on technology are rising and are making sweeping changes in the financial world. They have changed the way of dealing with finances and are already impacting several individuals and businesses.
The evolution of fintech startups over recent years has changed the financial landscape. It won’t be wrong to say that the word Fintech is proving to make some major buzzwords in the financial services world.
Fintech Companies are Making Huge Wave in the Market
From banking sectors, international money transfers, business and personal loans to personal investment, fintech dominates and presents a strong competition to the traditional banking system by using new technology and innovative ideas. This is increasingly making a sizable impact on global finance and the way many businesses conduct their finances.
It is estimated that U.S fintech companies raised around $12.8 billion in the first half of 2021. This just goes on to show the dramatic rise of fintech companies in the US. It is expected that the Fintech sector will grow from strength to strength that would lead to more growth in the relative finance sector. As technology develops, we will see the best fintech startups offering advanced solutions.
Reason that Led to the Rise in Fintech Companies
The growth rate of the fintech industry is exponential. With the help of diverse startups, the United States has revolutionized the FinTech industry. But what led to the rise in fintech companies in the US? Let us look at the possible reasons that have led to the rise of Fintech companies in the U.S.A.
1. Advanced Technology
Advanced machine learning software and new technologies are used in fintech. Whereas if you see the conditions of traditional financial services, it is still struggling to wrestle with such technology concepts.
2. Low Delivery Cost
The servicing costs in fintech companies are pretty low while they provide significantly better services. Most of the services are fully automated, or they use some human-in-the-loop computing. Also, the fintech companies are way ahead of knowing about their customer problems than some of the best automated traditional financial institutions.
3. Rapid Scale Business
Fintech companies are some of the fastest-growing companies globally. They are considered to provide high tech leveraged business services that emphasize smart automation, big learning, and human drive processes. This has scaled up the financial companies and given them an edge in the modern world.
4. Regulation
As we know by nature, regulations are usually created to control and slow things down, but it has not been in the case of fintech. In fact, regulations have caused a massive acceleration in the growth of fintech companies. It has open doors for tech startups and financially sound companies.
5. Low Acquisition Costs
Customers who are associated with fintech companies know that the acquisition costs are pretty low and, in fact, account for about 1/100th of the community or traditional banks. The new fintech entrants in the industry are able to leverage all the latest and efficient digital marketing tools and are often free of heavy, expensive regulations.
Some of the Top Fintech Startups in the USA
Let us see some of the fintech companies that have grown over the years in the USA.
1. Kraken
Cofounded by Jesse Powell, Kraken has emerged as one of the largest cryptocurrency exchanges that fall right after Coinbase. It became the first crypto firm to receive a banking charter last year.
2. Brex
Brex was co-founded by Henrique Deburgos and is a famous fintech company that designed products for other startups, including Carta, Airbnb, and has an estimated round of around 20,000 customers. It also provides its customers with additional benefits such as corporate credit cards, travel rewards, cash management accounts, and some efficient expense-tracking Software.
3.Three-way Tier
Three-way Tier was among the earliest cryptocurrency exchanges to launch and is a seven-year-old startup. It was co-founded by Tyler Winklevoss, who was among the early bitcoin investors and now a billionaire. This particular Fintech company has recently purchased the NFT exchange Nifty gateway that expands itself to digital art auctions.
4. Plaid
Plaid was founded in 2012 by Zach Parret that allows big names like Robinhood, Coinbase, and Venmo to connect to their bank accounts easily. With its efficient services, last year Plaid doubled its customer count to 4500.
5. Stripe
Stripe was co-founded by Patrick Collison and is known to help its customers process online payments for both small businesses and tech giants like Zoom and Microsoft. It has emerged as one of the most valuable startups in the world.
Also, to check out our article on Best Fintech Start-ups in USA, click here.
Takeaway
During the pandemic, fintech companies provided opportunities to interact with people and changed the structure of finance and banking. There is no question that America’s fintech companies are developing at an alarming rate. It even completely changed the way the financial sector works. Although the fintech industry is still in the early stages of adoption, it is poised to witness long-term growth in the years to come.
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