Mapping the Financial Innovation Vertical Since the Expansion from InsurTech
By Naida Alihodzic and Mark Lobo
Storrs, CT -- This semester marked the expansion of the verticals in Hillside Ventures, in which InsurTech became Financial Innovation. This change allowed us to broaden the scope of companies we could look at and adapt to the evolving landscape of FinTech as an industry. The rising popularity of Decentralized Finance (DeFi), AI usage of automation and wealth management, stable coins, and more, inspired our analysts in selecting their subvertical.
WealthTech and Personal Finance
In our vertical, the WealthTech and Personal Finance sub-vertical focuses on leveraging technology to reshape how individuals manage and grow their money. We look at different innovations such as robo-advisors, budgeting apps, and digital investment platforms that make financial planning more personalized and accessible. Companies in this sector commonly use AI and data analytics to help users make smarter financial decisions and build long-term wealth. As this space evolves in the near future, we see it driving financial inclusion and empowering users to have greater control over their financial futures.
Health InsurTech
This subvertical highlights the relevance of continuing to track the InsurTech space. The trends commonly seen in other areas of FinTech continue to apply in insurance, such as the use of artificial intelligence or blockchain technology to improve the industry for both business convenience and customer experience. For instance, many of the startups we see in this space are training AI for claims automation, personalization of policies, digitized health monitoring, and cost optimization. Recently, some of our analysts had an expert consult call with a venture capitalist from Northwestern Mutual Future Ventures, and one of the more pressing points of the call was to stress the significance of this subindustry for future generations as well.
Capital Markets Technology & Credit and Lending
This sector in our vertical centers around the modernization of capital markets and the transformation of credit and lending processes. The Financial Innovation team explores startups that are streamlining trading platforms, enhancing peer-to-peer lending, and digitizing credit evaluation through machine learning and real-time data processes. These technologies aim to increase access to capital, improve risk assessment, and create more efficient financial ecosystems. We believe this sector has the potential to democratize investment and lending opportunities on a global scale.
Risk Management (InsurTech)
Risk Management, or RiskTech, involves analyzing startups specializing in advanced risk analysis, which is at the heart of insurance. Through data utilization, artificial intelligence, and predictive modeling, startups can address emerging and rapidly changing risks like cybersecurity challenges or climate change. The market presents strong potential for scalable growth, driven by increasing demand for modern solutions in a fast-changing regulatory and risk landscape. As uncertainty in the world grows in tandem with the development of new technologies, RiskTech becomes more significant to mitigate risk.
Regulatory Technology and Transactions
Regulatory Technology and Transactions is focused on innovation in compliance, risk management, and secure transactions. We investigate startups that are developing solutions which automate regulatory reporting, monitor financial activity in real-time, and reduce the cost of compliance. These technologies are currently playing a critical role in improving transparency and trust across financial systems. As regulatory demands grow, startups within this sector will be essential to building more resilient and scalable financial infrastructure.
Conclusion
The expansion of our vertical has provided our analysts with valuable opportunities to explore the future of the financial industry through research and sourcing across each subvertical. As technology evolves and its applications continue to modernize the industry at a swift pace, our goal is to stay aligned with these trends and strategically expand our portfolio into these markets with tremendous global potential.