The
"Third
Wave" generation or the information
age has spawned and will give birth to various new industries.
Part
of this has been the the Financial Technology (FinTech) industry.
Financial
Technology, according to Wikipedia,
are the "line of business based on using software to provide
financial services". Additionally, the the technology heavy
companies "are generally startups founded with the purpose of
disrupting incumbent financial systems and corporations that rely
less on software".
In
short, Fintech industries have emerged to challenge incumbent
institutions established by the industrial revolution.
What
distinguishes the "information age" as against the
"industrial revolution" has been the "decentralized"
platforms enabled by digital technology relative to the latter's
"centralized" (top-down) institutions.
2015
have been a great year for the Fintech. Below is an infographic of
the state of the Fintech in 2015.
As
an aside: disclosure: I do not have exposure yet on Fintech.
The
SavvyBeaver writes,
Financial technology or FinTech is an integral part of the global economy. It's what processes transactions, helps us monitor the markets, and keeps the banks ticking. In recent years this kind of technology has rapidly evolved with the advent of mobile banking, cryptocurrencies like Bitcoin, and the general rise of financial apps. There's no telling where it will take us in the future, but if the current stats are anything to go by GROWTH is the word.
A new infographic from SavvyBeaver Canada and startup Call Levels takes a closer look at the current financial technology landscape.
Its exponential growth can be clearly seen from the investment side. From 2013 to 2014, global investment in FinTech jumped from $3 billion to over $12 billion - a 400 percent increase. When the full data from 2015 is in, it's expected to have reached a staggering $40 billion!
Payment and lending solutions make up 40% of all investment, but blockchain technology (popularized by Bitcoin) and Cloud-based services are also heavily backed.
Unsurprisingly the United States is the largest investor, followed by Europe and then Asia. Giants like Citigroup, JP Morgan and Goldman Sachs are all pumping millions in to the industry, alongside individual entrepreneurs like Marc Andreessen of Netscape and Reid Hoffman of LinkedIn. The general public are also increasingly investing, with stocks in Paypal and P2P lending platform Lending Club, leading the pack.
The majority of FinTech startups are also born out of the US, from tech hubs like Silicon Valley, New York and Boston. Collectively these account for roughly 4.7 million companies. India is next with 1.92 million FinTech startups and the UK accounts for 820,000, most of which are developed in London.
The top 5 Unicorns of 2015 (I.e. startups that have been valued over $1 billion), include mobile payment processor Square Inc ($6B), online payment processor Stripe ($3.5B), eCommerce and mCommerce technology company Powa ($2.7B), P2P lending platform Prosper ($1.9B), and outsourced payment processor Adyen ($1.5B).
Quite clearly the current demand is for efficient online and mobile payment processing solutions, which is just a reflection of how society wants to do business. Whether it's the local plumber wanting to accept digital payments instead of cash or a giant corporation wanting to include Bitcoin as a payment option, FinTech is helping us get there.
Meanwhile the top FinTech acquisitions of 2015 include the sale of bank software provider SunGard to FIS for $9.1B, DH Corporation acquired bank payment solution provider Fundtech for $1.25B, and digital payments business Skrill acquired online payment provider Optimal Payments for $1.2B.
What drives FinTech is innovation and efficiency. Simply put people want to be able to access financial services quickly, easily, on the go and for a cheaper price than traditional services. Even relatively new technologies like contactless credit cards are already being challenged by apps like Google Wallet that lets you do the same thing but with your phone instead. One less item to carry and extra security.
Other apps currently in the limelight include Call Levels itself, which allows you to monitor markets like equities and Bitcoin and receive alerts when there's a move you need to know about. Venmo is a digital wallet that allows you to send money instantly between friends and family for free, and you can fund the transaction with credit cards and bank accounts. On a larger scale it could easily rival Paypal.
Quite what the future holds isn't clear but FinTech advocate Michael Spencer believes the public are going to become far more educated in managing their assets and finances because of the apps themselves. He and other analysts like Chris Skinner are also predicting that some of us could end up doing our banking through Facebook.
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