By Vanessa Malone

The digitization of financial services has blurred, if not completely erased the lines between finance and technology. 

Fintech has been making waves for years, but a tsunami in the form of the COVID-19 pandemic expedited its position as the clear new business model. For example, Microsoft’s CEO says the company has seen two years’ worth of digital transformation in just two months of its third quarter.¹

Today, what was originally thought of as back-end infrastructure technology for incumbent financial service providers has shifted to a consumer-focused model, a model that’s rapidly gaining traction.

As we discussed last week, fintech is not just a technological shift but a cultural shift. Peer-to-peer lending, crowdfunding, mobile investing, online banking, and other major sectors of the fintech industry all reflect the evolving values and perceptions of today’s consumer. Consumers demand accessibility, community, and transparency.

This has resulted in a wide array of financial products and services built to lower costs, empower financial decisions, and create personalized experiences. 

Creating tools that simplify the capital raising process, better the investment experience and streamline trading are game-changing innovations. These technology solutions surrounding investing and crowdfunding have also brought attention to potential risks that all fintech companies should consider.

Appealing to a new wave of investors

One of the principle values most fintech companies emphasize is financial inclusion, which is a powerful goal. Equity crowdfunding offers a new way to access capital, giving anyone over the age of 18 — with a few restrictions — exposure to early stage investment opportunities previously limited to high-net worth individuals. Companies like Stash, Acorns, and Robinhood have also brought in younger and less experienced investors with user-friendly apps and tools. 

The premise of democratizing finance and empowering individuals to take control of their finances with technology solutions is an important transformation, but targeting younger and less experienced investors inevitably opens the door to some risk. 

To address this, the same care put in place to ensure a seamless user experience needs to be placed on educating users about the markets they’re participating in and investment strategies they’re now leveraging with the click of a button. Education, although not as sexy as the technology, should not be brushed aside or thought lesser of. 

Streamlined tools, but with protective measures in place

Placing emphasis on education is only half the battle, fintech companies also have a responsibility to make tangible efforts to protect consumers throughout the frictionless processes they’re creating.

In a recent New York Times article, one Robinhood user shared his experience with the trading platform’s “one-click trading, easy access to complex investment products, and features like falling confetti and emoji-filled phone notifications that made [trading] feel like a game.”² While this can do well to modernize the investment process, it’s critical to keep guardrails in place. 

We believe that sacrificing investor protection for the sake of simplicity is unacceptable. This is why Horizon has always built its compliance and trading technology with the core focus on enhancing compliance and increasing investor protections.

Concluding thoughts

Online trading, crowdfunding, and other areas of fintech have opened the doors to an entirely new wave of investors and individuals eager to take ownership of their finances. What we’re learning is that with this power comes great responsibility for fintech companies to match and even exceed usability with protective measures.

What responsibility do you think fintech companies have on educating and protecting this new wave of investors? 

About Horizon:

Horizon offers a suite of integrated securities software applications for compliant issuance through secondary trading of electronic securities. Truly a compliance-first business, our solutions combine Wall Street and Silicon Valley to power the next generation of exchanges and securities offerings in the U.S. and globally. Visit us at




Leave a comment

Your email address will not be published. Required fields are marked *