Innovation Quarterly: Latest in Fintech Innovation Q3 2016

by Stephen Greer, November 25, 2016
Industry Trends
Global

Abstract

Celent has released a new report titled Innovation Quarterly: Latest in Fintech Innovation Q3 2016. The report was written by Stephen Greer, an analyst with Celent’s Banking practice.

In 2010, total investment in financial services technology totaled less than $2 billion. Since then it has skyrocketed, reaching more than $12 billion in 2014 and $22 billion in 2015, according to Accenture. Nowhere is the growth of fintech more evident than industry conferences like Swift’s Innotribe and Finovate. These industry events are the testing grounds for innovative creations, growing each year to include even more emerging players.

Emerging technology startups — fintechs — within financial services are mostly small, with limited market exposure, but are innovating on specific processes and lines of business within traditional banking. Only recently has the industry finally begun to embrace the market entrants. Venture capital dollars have shifted toward startups that position themselves as industry collaborators rather than disruptors.

In 2010, more than 60% of investments in North America were in “disruptive” Fintech startups, and only 40% went to those positioned as “collaborative.” In 2015, that flipped to 40% disruptive, 60% collaborative. For the majority, becoming the Uber of banking is no longer the end game. Banks are increasingly seeing the value these companies can offer, and are more ready to engage. There’s an appetite for change, and most agree that digital technologies will be a benefit to the industry. Yet the market moves fast, and each year more companies are emerging with creations that could change the dynamics of financial services. Even for the largest institutions, keeping up to date with these changes can be overwhelming.

“There’s no doubt that fintech startups are changing the nature of banking. New innovators are setting the trends, often raising the bar for what ‘good’ looks like,” said Greer. “Investors have jumped at the opportunity to fund these ventures, excited by the immense potential.”

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

1

The Emerging Fintech Opportunity

2

What’s Notable on the Fintech Scene

4

Digital Banking

5

 

Market Impact

8

 

Why Are These Fintechs Important for Banks?

9

Peer-to-Peer

10

 

Market Impact

12

 

Why Are These Fintechs Important for Banks?

13

Money Movement

14

 

Market Impact

16

 

Why Are These Fintechs Important for Banks?

16

Practical Takeaways

18

Leveraging Celent’s Expertise

19

 

Support for Financial Institutions

19

 

Support for Vendors

19

Related Celent Research

20

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