When it comes to funding startups, fintech reigns supreme.
In 2015, according to Accenture, global fintech investment reached $22.3 billion (U.S.) — up 75 per cent from $12.7 billion the year before. The rush to develop the alternative, online platforms offering financial services is moving more quickly than many other areas of tech innovation.
Banks and brokerages occupy a central position in every economy. In Europe in 2014, the total assets of the banking sector were €26.8 trillion. In the U.S. in 2015: $15.75 trillion.
Who wouldn’t want a piece of that?
Tech startups have started quietly joining the financial sector with the aim of providing a new world of solutions, including payment and loan services, currency and investment platforms, and wealth management tools. These have been the domain of banks and governments for centuries.
One factor increasing pressure on financial services — and creating big opportunities for startups — is a large wealth transfer happening between the generations.
“There is a $40 trillion intergenerational wealth transfer that is in progress, from a generation that has traditionally relied on an in-person advisor relationship to a generation that expects much more of a technology-augmented experience,” top Vanare executives Richard Cancro and Alexey Sokolin said in a recent Financial Technology Partners report.
This transfer combined with the millennial generation’s expectation of a more technology-augmented experience — which traditional banking providers have been slow to provide — is creating a moneyed user base keen to embrace new approaches to banking.
While regulations remain a hurdle, particularly in the wake of the 2008-09 global recession, fintech startups are expected to jump through every hurdle required to cater to the coveted millennial demographic, which is expected to make up two-thirds of the global workforce by 2030.
For July, we are exploring the vast market opportunity that is fintech.
Watch for our interviews as well as explainers and exclusive entrepreneur profiles, as we explore one of the hottest topics in tech today.