With some of the technologies that could incorporate FinTech including big data analytics, machine learning and cognitive computing, digital currencies and blockchain, and mobile payments, startups and investors have the opportunity to get involved in this relatively new, though quickly expanding, market.
Swallowing a large piece of the financial services pie, these “disruptors” are seen as a threat to traditional banking institutions.
In an attempt to smooth this conflict, a matchmaking service named Matchi has been developed, helping the old boys of traditional financial institutions and the upstart FinTechs integrate and form meaningful networks. But there’s a lot more to FinTech than banking and insurance.
O’Reilly Media’s Radar investigated the focus of FinTech innovation and found data, lending, payments and international transfers, and small business financial solutions at the head of the pack.
Data analysis is being utilised for better decision making, and some startups are predicting loan success and providing better methods of loan pre-approval. New payment methods continue to emerge, and FinTechs in the crowdfunding and peer to peer lending environment are often better able to understand lending and return on investment.
The variety of FinTech services available to small businesses is extensive, with solutions for accounting, invoicing, payroll, and currency exchange. Just a short distance behind the leader (data) sits a group of FinTech companies related only because they don’t fit into any of the traditional categories. FinTech isn’t only innovating in developed sectors, but it seems it’s pushing these boundaries too and exploring typically unchartered territory.
Oscar Health is valued at $1.5 billion and provides digital health insurance for the post-Obamacare era.
In just 16 months, the company broke the $1 billion valuation mark, and it is backed by PayPal co-founder Peter Thiel, Goldman Sachs, and Asia’s richest man, Li Ka-shing. The goal is to use “technology and design to make healthcare simple, intuitive, and human.”
This online Chinese FinTech has a value of $1.3 billion and lets Chinese consumers buy electronics in installments. In just over a year, it’s raised $225 million in investment.
With a focus on smartphones, laptops, and consumer electronics, the business is tailored to students and young white-collar workers, allowing customers to set their down payments and the number of installments they require.
One of the top performing FinTechs’, Markit provides financial information and data. In the run-up to the sub-prime mortgage crisis, the original platform of credit derivative pricing was phenomenally popular, and last year stock shot up over 50 per cent on debut.
Now Markit promises high quality, scalable, flexible data services through a combination of cutting-edge technology and expertise.
SoftBank, a Japanese technology giant, is the largest backer of Housing.com, an Indian online real estate platform with home loan features.
Users can find hostels and serviced apartments, buy, sell and rent property, apply for home loans, create rental agreements, and find agents – a definite winner in a country of 1.2 billion people.
Providing free HR software for small businesses, Zenefits is valued at $4.5 billion and saw revenue grow from $1 million in 2013 to $20 million in 2014. Features include payroll, health insurance, HR, and compliance and management software, and the platform makes money by charging health insurers a broker fee.
If the above list has sparked your interest, take a look at some of the FinTech innovation competitions taking place: BBVA Open Talent, The Future of Money & Technology, Innotribe Startup Challenge. There’s room for new developments, but there won’t be for long.