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In recent years, we've seen a ballooning of activity in fintech — an expansive term applied to technology-driven disruptions in financial services. And 2018 has been no different, with fintechs' staggering influence on the market evidenced by record funding levels for the industry — by Q3 2018, overall funding was already up 82% from 2017’s total figure, according to CB Insights.
Additionally, this year marked a watershed moment for the industry, with the once clear distinction between fintechs and financial services proper now blurred significantly. Virtually every incumbent financial institution (FI) is now looking inward and engaging in an innovation drive, spurred on by competition from fintechs. As such, incumbents are now actively investing in, acquiring, and collaborating with their fintech rivals.
In this report, Business Insider Intelligence details recent developments in fintech funding and regulation that are defining the environment these startups operate in. We also examine the business model changes being employed among different categories of fintechs as they strive to embed themselves further in mainstream finance and prove sustainability. Finally, we consider which elements of the fintech industry are rapidly rubbing off on incumbent financial services providers, and what the future of fintech will look like.
The companies mentioned in this report are: Funding Circle, GreenSky, Transferwise, Ant Financial, Nubank, Cellulant, Oscar Health, Stripe, One97, UiPath, LianLian Pay, Wacai.com, Gusto, Toast, PingPong, Flywire, Deposit Solutions, Root, Robinhood, Atom, N26, Revolut, OneConnect, PolicyBazaar, WeCash, Zurich, OneDegree, Dinghy, Vouch Insurance, Laka, Cleo, Ernit, Monzo, Moneybox, Bud, Tandem, Starling, Varo Money, Square, ING, Chase, AmEx, Amazon, Monese, Betterment, Tiller Investments, West Hill Capital, Square, Ameritrade, JPMorgan, eToro, Lendy, OnDeck, Ripple, Quorom, Chain, Coinbase, Fidelity, Samsung Pay, Google Pay, Apple Pay, Bank of America, TransferGo, Klarna, Western Union, Veriff, Royal Bank of Scotland, Royal Bank of Canada, Facebook, ThreatMetrix, Relx, Entersekt, BNP Paribas, Deutsche Bank, Gemalto, Lloyd's of London, Kingdom Trust, Aviva, Symbility LINK, eTrade, Allianz, AXA, Broadridge, TD Bank, First Republic Bank, BBVA Compass, Capital One, Silicon Valley Bank, Credit Suisse, Ally, Goldman Sachs.
Here are some of the key takeaways from the report:
- Fintech funding has already reached new highs globally in 2018, with overall funding hitting $32.6 billion at the end of Q3.
- Some new regions, including South America and Africa, are emerging on the fintech scene.
- We've seen considerable scaling in older corners of the fintech ecosystem, including among neobanks and alt lenders.
- Some fintechs, including a number of insurtechs, have dipped into new markets to escape heightened competition.
- Emergent areas like blockchain and distributed ledger technology (DLT), as well as digital identity, are gaining traction.
- Many incumbents are undertaking business transformations that aim to reimagine everything from products and services to front-end systems and back-end processes.
In full, the report:
- Details the funding and regulatory landscape in the US, Europe, and Asia.
- Gives an overview into a number of fintech segments and how they've changed over the past year.
- Discusses how incumbents are reacting to fintechs in order to stay relevant in the changing financial services sector.
- Evaluates what the future of fintech will look like and what trends to look out for in the coming year.
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