Entrepreneurs with no financial services background still build superior fintech startups to those from traditional finance or banking businesses, according to venture capital firm Earlybird’s Christian Nagel.
The partner at the Berlin-headquartered firm told FinTech Global that he was seeing the most-disruptive innovations from people with no prior experience of the finance industry.
For many with financial and banking backgrounds, fintech seems like an attractive area to apply their skills and knowledge, despite the risk associated with startups businesses.
That is especially true right now, at a time when major banks are continuing to reduce their headcounts. A report from Citigroup last year forecast that European and US institutions will cut another 1.7m jobs over the next decade.
That follows the 730,000 jobs Citi says banks have already done away with since they hit their peak staffing levels, as automation and online services reduce the need for human employees.
For VC firms such as Earlybird, however, the types of companies these founders create are not the ones bringing major disruption to the field that can be capable of delivering the sizable return early-stage investor depend upon.
“People with banking backgrounds do come up with interesting ideas or product optimisations,” says Nagel.
“But the most disruptive things are driven by people who don’t have a deep rooting in the banking industry.”
To read the rest of this article as well as perspectives from other FinTech investors, founders and corporate leaders go to FinTech Global.