US Startups Disrupting the Financial Industry with Applications

Explore how new cutting-edge startups are transforming the financial landscape by breaking barriers to entry by democratizing access to financial services for the wider population.

Andrea Jonker
June 8, 2023
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The financial industry has long been associated with traditional institutions (corporate banks and incumbents), complex processes, and little accessibility for many underserved individuals. However, in recent years, a wave of innovation has emerged from US startups, revolutionizing the way we interact with finance. These startups are breaking barriers and reshaping the financial landscape by leveraging innovative applications. Applications that are overhauling multiple factions like payments, investing, lending, and blockchain technology to cater to more individuals and transform the industry as a whole. 

Applications Transforming Outdated Areas

Some of the key areas where US startups are making a significant impact are with traditional banks cumbersome processes, high fees, and limited accessibility. These startups have developed user-friendly applications that provide convenient and inclusive banking services. Their app development of their platforms has included features such as enabling users to open accounts, manage transactions, and easily access financial tools all within their smartphones. Current and SoFi are prime examples of such startups.

Previously, investing in the stock market and other financial instruments required significant capital, trading expertise, and time-consuming processes. However, with the introduction of investment apps, startups are democratizing the landscape by empowering individuals to become investors in a matter of seconds. These applications provide intuitive interfaces, educational resources, and even automated portfolio management, allowing users to autonomously invest and grow their wealth. 

Traditional lending institutions have often alienated many people seeking loans with lengthy approval processes, rigid eligibility criteria, and high interest rates. Startups, on the other hand, are leveraging technology such as app development to create applications that streamline lending, making it faster, more flexible, and more accessible. 

Lastly, traditional personal finance management usually involved spreadsheets and manual tracking. However, startups have developed intuitive applications that automate budgeting, track expenses, and provide real-time insights into the financial state of an individual. These applications leverage machine learning algorithms to categorize transactions, identify spending patterns, and offer personalized recommendations for saving and financial goal setting. Through their innovative tools, they’re ablt to assess creditworthiness more accurately and provide loans to individuals and businesses that may have been overlooked by traditional lenders. 


Startups with Application Solutions

Startups like Paypal, Stripe and Square have built platforms to accept payments online and via mobile devices, enabling businesses to be operational quickly.These platforms are powering payments for millions of businesses worldwide and capturing significant market share from traditional players. Currently, Paypal holds 30% while Stripe holds roughly 25% of the market share respectively. Increased consumer demand for digital banking services has given rise to numerous technological advancements with  neobanks relying on artificial intelligence to automate back-end operations such as administrative tasks and data processing which in turn alleviates pressure put on employees to complete day-to-day tasks. Recently, tech leaders have also joined the payments sector with tap or scan-to-pay solutions such as Apple Pay, Google Pay, and QR codes gaining ground.  

Robinhood and SoFi are prime examples of startups that have attracted millions of customers with their simple and engaging mobile apps. Robinhood pioneered zero-commission stock trading while SoFi started as a student loan provider but now offers an array of financial services. 

Affirm and LendingClub are leading the way. Affirm offers point-of-sale (POS) consumer financing for online purchases without the difficulty and high fees associated with credit cards. LendingClub operates an online marketplace that connects borrowers and investors for personal loans and lines of credit. Through the use of technology to screen applicants and determine interest rates, these startups deliver fair and efficient lending services to consumers looking for alternatives to the traditional banking sector.

Other startups within the space include blockchain and cryptocurrency companies that are leveraging blockchain technology to allow people to buy and sell popular cryptocurrencies, provides payment and treasury infrastructure using blockchain, and offer crypto trading and custody services to both individuals and institutions. Coinbase, Circle and Gemini are exposing individuals to an expanded array of financial assets and services.

In Conclusion, the US financial system is being modernized and democratized through technology and application driven platforms. By leveraging technology, data-driven insights, and a customer-centric approach, these startups are empowering individuals, democratizing access to financial services, and redefining traditional financial practices.

As seen on FOX, Digital journal, NCN, Market Watch, Bezinga and more

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