Last month, German fintech startup Raisin announced its Series D, with PayPal, Ribbit Capital, Index Ventures, and Thrive Capital investing $114 million.
Raisin provides consumers with a selection of deposit and savings products from many financial institutions, in a single place.
Raisin does not charge consumers fees, instead offering a digital platform consumers use to manage their accounts. When users open accounts at partner banks, Raisin earns a commission.
Therefore, Raisin acts as a digital (and scalable) financial advisor. Of course, the platform presents the same agency costs as human brokers: “advisors” posing as offering advice, but with an incentive to sell whichever product provides the highest commission.
The success of platforms like Raisin depends in part on whether this conflict-of-interest causes a regulatory crackdown.
There is no particular reason why it should, as the incumbent financial institutions which influence regulators benefit from these marketplace businesses — certainly, they don’t threaten the banks’ core business model.
However, whether regulators tolerate these new digital intermediaries will largely depend on their behavior. If companies like Raisin treat consumers fairly, then a rigid regulatory response is unlikely, but in the event of a scandal, all bets are off.