A Deep Dive into Fintech
Not too long ago, when thinking of Financial Technology, we cited the amazing phenomenon of having your checking account balance viewable on your phone or being able to pay for products online with peace of mind. Though these remain essential Fintech applications, the space has grown rapidly in recent years to modernize and automate the way we interact with our finances on both an individual and corporate level.
It’s no secret the massive attention that Fintech has gained from investors. According to KPMG, 2017 was another strong year for Fintech funding; roughly $31 billion was invested into the market, bringing global Fintech investment to $122 billion over the last three years. Last year proved the industry’s attractiveness across numerous investment channels, as PE funding reached a new high of 139 deals, M&A increased to 336 mergers, VC led the way with over 1,000 investments. Equally impressive was the record high amount of exit activity in the fourth quarter at $2.4 billion, indicative of increasing maturity for the Fintech sector.
We’ve already witnessed a wide range of services that Fintech can completely alter, including but not limited to: mobile money transfers (peer-to-peer payments, foreign exchange), insurance (home, auto, and company), asset management (robo-advisory, mobile stock trading), and regulatory technology (anti-money laundering, know-your-client compliance). Looking ahead to 2018 and beyond, new trends will be woven into the already diverse Fintech fabric. Blockchain offers enormous potential as a secure, instantaneous method of transferring financial data across and within institutions. Mobile wallets and QR payment channels have still yet to achieve truly widespread adoption. Lastly, machine learning and AI are likely to soon replace all “front-line” consumer services and eventually provide the back-end analytics to predict financial behavior and protect against security compromises.
Relative to other startup sectors, Fintech is unique in that it seeks to revolutionize businesses and services closely entangled with the public sector and government regulatory bodies. This is precisely why a successful Fintech company typically takes many years to build – moving too fast and cutting corners comes with the added risk of ignoring any number of the many consumer protection or securities-related laws that govern the financial world. For this reason, these startups require a diverse team staffed not only with great engineers, but also equally great legal, compliance, and subject matter experts. In Fintech, disruption is defined by delivering a unique, powerful tool to consumers while simultaneously being able to speak the language of the financial establishment.
Here’s a look at some of the biggest and fastest growing Fintech companies in America:
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