The “Second Era” of Fintech Investment: A List of Things to Know

We’ve entered the most profound era of change for financial services companies since the 1970’s brought us index mutual funds, discount brokers, and ATMs.

“The fintech story has been changing, however. Forward-looking banks have responded to the challenge, digitizing their operations and offering an array of innovative products and services through digital channels.” – McKinsey

In this “Second Era” of Fintech investment, what are some things we should all be aware of?

  1. FinTech is changing customer behavior and expectations at a tremendous rate.
  2. Cashless payments have become a saturated segment. Forerunners like PayPal are competing against phone manufacturers such as Apple and Google, new players like Skrill and Venmo, and even card companies such as Visa and Mastercard.
  3. The areas of Fintech attracting media and investor attention are changing. Insurtech, robo advisors, and digital-only banks are only a few of the segments making waves. B2B fintechs are also playing an increasingly prominent role in the ecosystem.
  4. FinTech startups are democratizing Finance and incumbents must adapt.
  5. Blockchain is in its infancy in the mortgage industry, but has the potential to turn the mortgage process into a slick, secure and fast end-to-end solution connecting all elements of the home loan chain.
  6. Customer experience in financial services continues to lag significantly below other verticals, and the opportunity to invest in the underlying infrastructure is massive.
  7. Underpinning many of the Fintech products making waves has been the technology allowing them to interface with an incumbent institution’s system.
  8. While the first wave of Fintech focused on consumer facing products, the real innovation for consumers will come from back-end improvements.
  9. Blockchain holds the keys to changing the financial system from the ground up.
  10. Not unlike Fintechs in banking, the initial focus of the Insurtechs has been on the retail segment: 75% of Insurtech business is in serving retail clientele, with the remainder in the commercial segment.
  11. Fintech-based Financial Health Benefit Plans can be a win-win for employers, employees and communities.
  12. Banking chatbots have the potential to create deeper, insightful connections with customers, automate backend operations, and create friction-free banking experiences.
  13. In Latin America and Brazil, a lack of banking services has created a boom for entrepreneurs and investors seeking to build lucrative Fintech innovators there.
  14. Alibaba has expanded its investment portfolio in Hong Kong and has chosen Qupital to be its first FinTech investment there.
  15. The notable trend in recent years is that advisor platforms themselves are not the only ones trying to build comprehensive advisor technology solutions. Advisor FinTech companies themselves are beginning to acquire and build across a wider range of solutions, morphing towards a more comprehensive platform.
  16. The focus of Fintech activity has partly shifted away from directly targeting end customers and competing with incumbents.
  17. Traditional banks and Fintechs are increasingly becoming partners in ventures in which the incumbents retain ownership of the end customer, while the Fintech help to improve the user experience and customer centric approach.
  18. Fintechs have changed the face of banking, but traditional financial institutions are catching up, turning what seemed to be a pure threat into a strategy for the leap into the next generation of financial services.
  19. Providing secure infrastructure for hundreds of Fintechs, without which consumers would have far less choice and control:
    1. Yodlee
    2. Quovo
    3. MX
    4. Plaid
  20. Banks will be able to improve customer experience through faster account approvals and payments, and reduced fraud. Some startups are in the early stages of tackling this opportunity, including:
    1. ComplyAdvantage
    2. CCOBOX
    3. IdentityMind
  21. Nonbank companies are rebuilding products with an API-first approach: Companies leading the way in this category include:
    1. Synapse
    2. Dwolla
    3. Cross River Bank
  22. Top Fintech incubators and accelerators in the U.S.:
    1. FinTech Innovation Lab
    2. Deutsche Bank Innovation Labs
    3. Barclays Accelerator
    4. Wells Fargo Startup Accelerator
    5. BNY Mellon Innovation Center
    6. Y Combinator
    7. The Hatchery’s B2B Ventures
    8. Ynext Incubator
    9. FinTech Sandbox
    10. SixThirty
    11. Entrepreneurs Roundtable Accelerator (ERA)
    12. Anthemis Foundry
    13. Plug and Play FinTech
    14. Georgia Tech’s Advance Technology Development Center (ATDC)
    15. QC FinTech
    16. Scivantage FinTech Incubator at Stevens Institute of Technology
    17. Coin Apex
  23. FinTech Companies Disrupting Banking:
    1. Wyre
    2. Xendit
    3. Xero
    4. N26
    5. Circle
    6. Simple
    7. Earnest
    8. Featurespace
    9. InstaMed
  24. FinTech Companies Disrupting Healthcare:
    1. Gem
    2. DreamQuark
    3. FitSense
    4. Kainos
    5. Liquid Landscape
    6. MedXoom
    7. Simplee
    8. Pact Fitness
    9. Patientco
  25. Fintech segments shaping Financial Services:
    1. Lending
    2. Payments
    3. Wealth Management
    4. Bitcoin
    5. Crowdfunding
    6. Money Transfer
  26. Top Fintech companies in the Lending segment are:
    1. Funding Circle
    2. Sofi
    3. Kabbage
    4. Avant
    5. LendUp
    6. MoneyLion
    7. Upstart
    8. MarketInvoice
    9. Fundbox
    10. Kreditech Holding
  27. Top Fintech companies in the Payments segment are:
    1. Stripe
    2. Paytm
    3. Mobikwik
    4. Affirm
    5. Ripple
    6. Activehours
    7. LevelUp
    8. Circle
    9. Revolut
  28. Top Fintech companies in the Wealth Management segment are:
    1. Betterment
    2. Wealthfront
    3. Personal Capital
    4. Acorns
    5. Robinhood
    6. Stash
    7. StockTwits
  29. Top Fintech companies in the Bitcoin segment are:
    1. Blockchain
    2. Coinbase
    3. Blockstream
    4. BitPay
    5. 21 Inc
    6. Bitstamp
  30. Top FinTech companies in the Crowdfunding segment are:
    1. SeedInvest
    2. Tilt
    3. RealtyShares
    4. Crowdcube
  31. Top Fintech companies in the Money Transfer segment are:
    1. TransferWise
    2. WorldRemit
    3. Azimo
  32. Big Data Companies Disrupting Fintech:
    1. DefenseStorm
    2. SensiBill
    3. InForcePro
    4. First Access
    5. Grow
    6. Sift Science
    7. Kreditech Holding
    8. Nimble
    9. Qineqt
  33. Chinese Fintechs Making Waves in the U.S.
    1. AliPay
    2. CreditEase
    3. China Rapid Finance
    4. Niu Jiao Suo
    5. WeBank
  34. Top Fintech Influencers on Twitter include:
    1. @cgledhill
    2. @brettking
    3. @leimer
    4. @JimMarous
    5. @davidbrear
    6. @Chris_Skinner
    7. @sbmeunier
    8. @SpirosMargaris
    9. @devie_mohan
    10. @TradingFintech
    11. @MikeQuindazzi
    12. @fintechna

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