Fintech reaches USD 19 bln globally in 2015 – report

Many fintech companies are looking to disrupt major banking processes, such as payments or lending, whereas others are working to enable banking clients to serve their customers better or reduce their operating costs.

More than a quarter of 2015 fintech deals involved corporate investors – ranging from 40% in Asia to 25% in North America and 12% in Europe. Corporates see fintech companies as enablers rather than competitors. In Asia traditional banks need to modernise how they service customers, so they are looking to fintech as a means of doing so quickly, according to Pulse of Fintech report, a quarterly publication developed in partnership with CB Insights, issued by KPMG, the source cites.

When it comes to competition, banks need to look beyond their current competitors and disruptive start-ups. While both of these groups could cause significant challenges to incumbent banks, corporates from other industries may pose the biggest threat; companies like Google, Apple and Amazon are already looking for ways to expand their reach into other industries. Regional players like Alibaba, Tencent and Baidu in Asia could also take market share from banks that are unprepared.

Fintech companies have primarily focused on payment technologies. In 2015, however, lending technologies also attracted investor interest. In fact, SoFi, an alternative lending company, attracted USD 1 billion in funding – the year`s largest fintech megaround.

In 2015 increased investment in fintech companies was focused on blockchain – especially from big banks looking to use the technology to make banking processes more efficient. Banks need to stay on top of blockchain and other evolving technologies like robo-advisory and digital identity. Each of these areas is likely to see increasing investment in 2016. By 2021, consumers will manage 85% of their relationships with an enterprise without interacting with a human – moving to the ‘DIY’ customer service concept, according to a recent article in NetworkWorld in the US, the source cites.

Many global banks have invested in Fintech ventures since 2011, including Barclays, BBVA, Citigroup, through its VC arm, Citi Ventures, Goldman Sachs, JPMorgan Chase, Morgan Stanley, Wells Fargo and Westpac.