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If you can’t beat the competition, then it’s better to join them instead. In the finance industry, traditional funding is continuously being threatened by robo-advisors, an online financial services site that provides portfolio management advice without the need for human intervention. The times are, indeed, changing, and rather than fighting the tides of change, conventional financial institutions are looking for ways to jump on the bandwagon.

The office of Penny Pritzker, the US Secretary of Commerce, held a private meeting between the leaders of the fintech startups and the nation’s leading financial enterprises including Citi, JP Morgan Chase, Goldman Sachs, BBVA and Bank of America. With more fintech startups coming into play, the founders of these new businesses can see the advantages in collaborating with the larger companies since the latter possess the capital and client base necessary to boost their business. In an interview with Yahoo, Pritzker said that the larger firms have dilemmas, while the smaller ones have the answers. She added that fintech presents the possibility to create more jobs, thus helping the economy  grow and prosper.

The meeting was held at the offices of LearnVest Inc., an online financial planner, in New York City. LearnVest CEO  Alexa Von Tobel  was the host of the event joined by Jon Stein, the CEO of Betterment. Both startups took the chance of merging with the big boys. Von Tobel sold the startup to Northwestern Mutual for more than $250 million, and both companies are reaping in the benefits of the alliance. Northwestern Mutual has started utilizing the program of LearnVest with their client base, while LearnVest continues to conduct its business independently. According to Von Tobel, as told to Yahoo Finance, the merger is a concrete example of a fintech innovation doing extremely well.The challenge now for the fintech industry is to repeat the outcome of the merger between LearnVest and Northwestern Mutual. In the past few years, some were successful while others failed. BlackRock-FutureAdvisor, Pershing Advisor Solutions-Motif Investing are examples of the company tandems that took on the challenge. The difference between LearnVest and those who went out of business is that LearnVest clients have the option of a live interaction with their financial planners.


The Alliance that took Everyone by Surprise

The meeting was held at the offices of LearnVest Inc., an online financial planner, in New York City.


Von Tobel’s co-host, Stein of Betterment, also seized the opportunity to partner with one of the country’s monumental mutual funds, Fidelity Advisor Solutions. Even though, Fidelity chose not to extend the contract, Stein told Yahoo Finance that he thinks both parties learned from the experience. Meanwhile, Fidelity followed the path that Vanguard and Charles Schwab took, and built their own robo-advisor. There are a lot of benefits of having these services under their own umbrella because they already possess a large client portfolio, and can carry on selling their own financial services and products.

Jeff Stewart, founder of Lenddo, was also present at the meeting. Lenddo took the credit score industry by storm when they used their client’s social media activities to construct a credit score. Their clients are middle-class citizens who have insufficient access to financial services. Lenddo is looking for support from the nation’s financial institutions in search of credit scoring alternatives in an effort to acquire customers who have never used credit cards, nor have possessed bank accounts. According to Stewart, it’s a win-win scenario for both parties since they have the technology,  and the major banks have the capability to extend credit to the consumers.


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