The rise of fintech is changing the face of the financial services industry, from challenging traditional banking models to bringing new digital products to market.
While some may fear the fintech revolution, there are opportunities to be had - esspecially for those who take advanatge of digital innovatations and strategic partnerships with emerging players. In fact, investment in fintech has grown from $1.8million in 2010 to $19million in 2015.
The services provided by large banks to customers: savings, loans, mortgages, international transfers and advice, have all relied heavily on branches and face-to-face interaction with their employees. Now with digital disruption, it has not only given account holders greater autonomy through online banking, but has opened up opportunities for new entrants to tap into new markets and create challenger banks.
New fintech start-ups are offering faster, easier, and cheaper ways to transfer money between countries, bypassing expensive bank charges; others are providing more mortgage options for people, especially those who have "thin" credit profiles and are using big data from a far greater spread of information than before to build more detailed pictures of these new customers who were unserved by traditional banks.
Equally, many large banks are now seeking to collaborate with fintech companies or imitate their success with their own services; and are investing heavily in digital talent and new technologies, particularly in the payments sector.
FinTech Start-ups To Watch
The infographic below highlights just how many fintech companies are filling demand across the banking and financial sector.
Catalyst tracks key developments and recent news for clients on disruptive fintech start-ups. Here are some of the latest stories:
- Citi, Credit Suisse, HSBC, R3 and Axoni Develop Reference Data Blockchain [LINK]
- R3 and Axoni Explore the Use of Distributed Ledger Technology to Reduce Risk in Reference Data Management with buy and sell side financial services firms [LINK]
- Five banks successfully test blockchain prototype built by Axoni [LINK]
- Transferwise launches in New Zealand [LINK]
- ACI Worldwide provides technology for TransferWise to integrate in Faster Payments Scheme [LINK]
- TransferWise gets your money moving worldwide [LINK]
- Revolut has signed a deal with Lithuania's central bank [LINK]
- Revolut Reports: More Than 3,000 Companies Have Signed Up For New Business Service [LINK]
- Funding Circle Hits £1.5 Billion Mark Lent to British Businesses (Infographic) [Link]
- Funding Circle CEO says it's a 'golden age' for marketplace lending as revenue jumps 144% [Link]
- Funding Circle: Is it the right investment option for you? [Link]
- UK Challenger Bank, Monzo, Chooses AU10TIX BOS Online ID Authentication [Link]
- Monzo Adds Voice Commands Via Siri In Update [Link]
- Monzo is a real, all-digital bank with cool - features that traditional banks do not offer [Link]
- London-Based Mobile Bank Monzo Raises £4.8M in Funding [Link]
How are major banks responding to fintech innovation?
Barclays Barclays operates startup accelerators in six countries worldwide and recently its Rise Accelerator in Mumbai has announced its first cohort of 10 startups. The accelerator offers mentoring and advice and access to internation markets for the accelerators' startups.
Elsewhere Barclays recently collaborated with Wave, and Israeli blockchain startup, to facilitate the world's first successful blockchain transaction.
Banking giant Morgan Stanley recently lent $100m to fintech startup Affirm, a startup allowing people to pay off purchases in monthly instalments.
Over the Summer, Santander's venture capital fund Santander Innoventures secured an extra $100m of funding, raising a total of $200m to invest in minority stakes in startups. Santander Innoventures has already invested in successful fintech companies such as Ripple, Socure and iZettle.
As the banking and finance sector continues to face disruption, the conditions for growing fintech companies are excellent: customers continue to want new, innovative and digital solutions to managing their finances. That said, as larger banks engage in digital transformation the competition may get harder, as the opportunities for banks to collaborate with fintech start-ups starts to increase. What is certain is that as this industry develops, the companies that succeed, whether big or small, will be those that embrace technology and stay on top of innovation.
Catalyst platform enables senior executives to stay up-to-speed on the latest innovations and market developments within their industry. Get in touch via firstname.lastname@example.org to learn how we can help you today!