The Next Frontier for 2-Sided Marketplaces: How Fintech Will Unlock Enormous Value


In 2019, two online marketplaces — Lyft, and Uber — will IPO for tens of billions of dollars.

With the level of success such companies have already seen, it’s easy for startup Founders to assume that all of the truly big opportunities have already been taken. In reality, nothing could be further from the case. The low-hanging fruit for online marketplaces may have been picked, but top Founders understand that the largest opportunities are often the hardest to grasp. The topmost branches of the tree can bear the richest rewards.

For 2-sided marketplaces, an extension to the traditional marketplace business model — incorporating financial services to enable new types of on-platform transactions — is the key to unlocking that higher level of opportunity. In this essay, we’ll explain why this apparently simple change will have enormous implications, and how it has already begun to define the next stage in marketplaces. We’ll also explain why what we’re calling fintech-enabled marketplaces have the potential to upend both traditional offline industries and incumbent marketplaces alike.

This last point is critical. As marketplaces encompass more of the transaction and tackle greater complexity in product offerings, we believe that they will bring laggard industries that have yet to be fully digitized, like education and healthcare, into the 21st century. In the process, whole new marketplace categories will be created. But what few realize is that the next generation of fintech-enabled marketplace startups will be a threat to incumbent online marketplaces as well. For Founders looking for opportunity where no one else sees it, understanding this is key.

The New Marketplace Playbook

To expand on what we introduced above, fintech-enabled marketplaces are marketplaces with tech-enabled financial services built directly into the platform. Recently, we’re seeing marketplaces begin to offer services like:

AI and data advances are enabling all three of these buckets, because models for underwriting debt, insurance, and loans are becoming increasingly powerful thanks to AI and increased data exhaust. A number of B2B companies have also been popping up which leverage the growing amount of data available to be sourced or scraped from public sources and package it together to underwrite risk for their customers.

<aside> ✏️ There are three key components to FinTech-enabled marketplace: the SaaS tool/software, the financial services, and the actual marketplace itself. In our case the "tool/software" component is the single-player tool that is an entertainment product designed to trigger savings behavior, the financial component is the digital banking and financial services offered directly from within our product, and the marketplace/community exists in the form of other users playing the game (multiplayer component) as well as third-party games and content that can be built atop of our game and played by our users – this marketplace component will be the hardest one to tap into but it will be important that we get there in order to start having other people build the content for us and increase the value and defensibility of our company.


Leveraging new data sources and AI reduces the cost of underwriting via automation and improves loss ratios relative to more traditional underwriting or credit models. As a consequence, insurance and alternative financing options are becoming cheaper and more broadly applicable, expanding accessibility and giving rise to new use cases for debt and insurance that marketplaces can tailor to their specific needs.