I’ve been collecting lists of interesting financial technology startups for a while, but mostly they are lost in emails, bookmarks, Evernote and yellow stickies. So a few weeks ago I decided to get organized and start putting together a sector map of “fintech”. Said Reuben Levy of Thinking FinTech Blog
It’s a good time to be doing this
- Last year fintech firms raised $5.3Bn from VCs, 2x the amount in 2013. Commentators love to debate which city — New York, London or San Francisco — will be the “capital” for fintech. Bottom line is that the funds are flowing.
- We’ve now had two of the first big fintech IPOs — Lending Club and OnDeck.
- Fintech innovation is fast, smart and has the potential to disrupt established business models: online marketplaces disintermediate banks; low cost, consumer-friendly investment platforms are attracting assets dramatically faster than traditional asset managers; branchless banks deliver better service at a lower cost to more people; new payment technology provides better security, convenience and customer loyalty.
- Traditional financial institutions are taking notice and starting to react. Many have (re)started venture funds or labs to make strategic investments. Others have chosen to partner (RBS referring clients to Funding Circle, Jefferies securitizing loans CircleBack, etc). Many more will acquire.
- This technology makes our lives better. In the future it will cost less and take less time to make a payment, transfer funds, buy foreign currency or obtain a loan.
So what is FinTech
People use the term “fintech” very differently. Historically it was used to describe technology applied to the middle or back office of banks. Others use it to refer to the innovation that is disrupting traditional financial institutions. I prefer a broad definition:
“Fintech is technology that either enables or delivers financial services.”
This is deliberately broad because I think of fintech as everything from enabling technology (e.g. crm tools for traditional wealth advisors) to the service itself (e.g. robo advisors). No doubt this definition is not perfect — storage and infrastructure software enable financial services, but that would stretch the concept.
Developing a taxonomy for the categories within fintech is challenging. I won’t claim that this map is perfect, and I hope it will evolve and improve over time. This map is certainly incomplete. I’ve had to start somewhere, so I included the most notable (in a very subjective way) companies in fintech today.
- For investors, I hope this map starts to paint a picture of significant themes, spaces that are crowded, and emerging opportunities. For entrepreneurs, I hope this map provides a guide to the areas of blue ocean or white space, as well as the technologies that could be combined to deliver a new innovative solution. Said Reuben Levy
About Reuben Levy
I am a strategist, investor, and business leader through my roles at Bloomberg and as part of the angel community. My background is in developing corporate strategy and helping incubate new businesses, both organically and through acquisition or partnership. Prior to my current role at Bloomberg, I lead several investments and acquisitions, and played a key role in helping launch Bloomberg’s corporate treasury business.
My career prior to Bloomberg was in investment banking at Credit Suisse, where I executed acquisitions, IPOs and capital transactions on behalf of technology companies.