When things start to revolutionize it is interesting to watch how people view it. Existing entrenched competitors want to strangle innovation in the crib. Some people scoff at it and say it’s a stupid idea that will never ever work. Early adopters become hard core advocates.
When I read Laura Hollis piece on fake news and how news agencies viewed the aftermath of the election, it occurred to me that we will see similar things in fin tech.
Finance is a lot different than the news. It’s people’s money at stake. If you think people get emotional about news, consider how emotional they’d get if a technical glitch caused them to lose data or their money. Back in 1997, when electronic trading was starting out, the lion’s share of traders said it would never work. The matching engine was pretty slow. The computer often went down, and the electronic traders were forced to go to a pit and trade. The price on the screen would deviate wildly from the price in the pit, and adjustments would be made. But, at least it was being done in a relatively small network.
When it comes to other things in finance, that’s not the case. Not only is their fear of switching from one system to another, but often entrenched regulators will cast a more serious eye on the early adopters. Sometimes, the educational process for the customer is a lot longer than expected. Longer sales cycles mean more cash burn.
It is often a lot easier to build new tech for finance than it is to sell it. Even when the customer sees all the benefits, there are still major hurdles to climb for them to be able to adopt it.
One thing entrepreneurs can do is to try and form an early adopter network. Get 8-10 customers that will run their tech in parallel with the old tech. That helps the entrepreneur find early bugs. It also helps them build momentum.