In-depth Market Insights & Data Analysis
The past decade has seen a significant disruption of the traditional banking industry, especially in the areas of payments, lending, wealth management, and retail banking. Interestingly, this change has not been limited to financial technology (FinTech) start-ups. Large technology and eCommerce companies such as Google, Amazon, Facebook, Apple, and Alibaba have managed to leverage their massive reach and technological capabilities to pose a stiff challenge to competitors.
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The past decade has seen a significant disruption of the traditional banking industry, especially in the areas of payments, lending, wealth management, and retail banking. Interestingly, this change has not been limited to financial technology (FinTech) startups. Large technology and eCommerce companies such as Google, Amazon, Facebook, Apple, and Alibaba have managed to leverage their massive reach and technological capabilities to pose a stiff challenge to competitors. The FinTech market as we consider it is further divided into: Digital Payments, Digital Investment, Digital Capital Raising, Digital Assets, and Neobanking. Of these, Digital Payments has the largest transaction volume.
The digital payment and lending businesses, including mobile wallets, P2P payments, alternative lending, cryptocurrencies, and robo-advisors are now finding mainstream acceptance in both developed and emerging countries. Broadly speaking, there are three types of players in the digital commerce payments market: providers with their own wallets such as Venmo and PayPal, online payment interface providers such as Stripe, and B2B offline payment providers such as Block (formerly Square). These providers make money by charging fees for each transaction, which is usually paid by the merchant.
Blockchain is a distributed ledger technology that can be used to execute, store, and verify transactions of every kind. It is mainly used for money transfers, buying and selling stocks, insurance contracts, and buying and selling physical goods and/or energy. After a significant decline in 2023, global investment in crypto and blockchain showed signs of recovery in the first half of 2024, totaling US$3.2 billion. However, large-scale deals were scarce compared to past years, with only five transactions surpassing the US$100 million mark - all in the venture capital sector.
Cryptocurrencies are probably the most well-known adoption of blockchain technology. Bitcoin, which was created in 2009, is the original and the most widely used cryptocurrency in the world.
Throughout history, women have had to overcome many challenges and stereotypes to establish themselves in leadership positions. However, as has been the general trend across industries over the past decade or so, women have not only started to assume more leadership positions in established companies but have also founded more startups that offer innovative products borne mainly out of their own frustrating experiences. Toast, Mission Lane, Betterment, and Ethos are a few examples of FinTech startups founded and led by women.
Ant Group (formerly Ant Financial), the most highly valued FinTech company in the world, is the holding company of Alibaba’s financial products. It operates in various business areas, including digital payments (Alipay), business finance (Ant Micro Loan), marketplace lending (Ant Check Later), wealth management (Ant Fortune), online banking (Mybank), and insurance and credit reference (Sesame Credit).
Block (formerly Square) started out in 2009 as a platform that offered a dongle so that businesses could accept card payments. The company has since evolved to become a provider of end-to-end solutions such as software, hardware, and financial services for sellers. It also provides a parallel financial services ecosystem that enables people to store, send, receive, and invest their money.
Online payment methods (e.g., PayPal, Amazon Payments) have the highest use in Brazil, Finland, and Germany, whereas debit cards are the most popular form of payment in the U.S. PayPal is the most-favored brand in terms of online payment among those surveyed in Germany, the UK, and the U.S. In Mainland China, the story is completely different with Alipay, WeChat Pay, and UnionPay taking the top three spots.
Cash still dominates financial POS transactions in Germany and the UK, but in Mainland China, mobile devices have already taken the lead. While the most widely used mobile payment provider in Mainland China is Alipay, Apple Pay takes the lead in the UK, and PayPal leads in Germany.
The U.S. leads in the number of FinTech companies globally. Specifically, most of the prominent U.S. FinTech companies are located in California and New York. In this report, we provide a closer look at some of those prominent U.S. FinTech startups: Venmo, Stripe, Ondeck, Lending Club, Prosper, SoFi, Betterment, and Wealthfront. Although they offer services in the same divisions, their specific conditions and features vary significantly. For example, in the Marketplace Lending (Consumer) market, SoFi offers personal loans with no origination fees, whereas LendingClub and Prosper charge fees that range from 1% to 9.99%.
Stripe and Robinhood are the two most funded FinTech startups in the U.S., with US$9.4 billion and US$6.2 billion in funding, respectively. Stripe is backed by key investors such as Andreessen Horowitz, Baillie Gifford, Allen & Company, General Catalyst, MSD Partners, and Thrive Capital. Robinhood is backed by Ribbit Capital and Emergent Fidelity Technologies, among others. SoFI and Block fall next in line, with US$4.8 billion and US$2.6 billion in funding, respectively.
A number of U.S. banks have made FinTech investments, with Goldman Sachs leading the pack with 20, followed by CapitalOne with 13 and Citigroup with 12.
Additionally, banks have also established innovation hubs focusing on various areas such as mobile banking, blockchain and cryptocurrencies, wearables, the Internet of Things, next-generation commerce, authentication, biometrics integration, augmented reality, and big data.
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