[alert type=yellow ]Every week at Tradestreaming, we’re tracking and analyzing the top trends impacting the finance industry. The following is a list of important things going on we think are worth paying attention to. For more in depth trendfollowing, subscribe to Tradestreaming’s newsletter .[/alert]
1. Goldman, JPMorgan Seen as Fintech Winners While AmEx Suffers (Bloomberg)
Goldman Sachs and JPMorgan will probably benefit most from the coming wave of financial technology disruption, rather than being supplanted by startups driving the change, according to a new survey.
2. 2015 Automated Platform Performance Review: Betterment vs. Wealthfront (Meb Faber)
Meb Faber with some good analysis on how Betterment performed this year vs. Wealthfront (and where Schwab and Vanguard come in). Hint: roboadvisors are neither “safe” nor are they one-size-fits-all.
3. Inside J.P. Morgan’s Deal With On Deck Capital (WSJ)
As part of the deal, OnDeck won’t put up any capital and will get fees to originate and service loans for J.P. Morgan, many with a value up to $250,000, previously considered too small to move the needle at the big bank. OnDeck also can use data it gleans from the partnership to improve its lending models. “We think it’s a watershed partnership,” said OnDeck CEO Noah Breslow.
4. Microinsurance Is The Answer To The Insurance Industry (TechCrunch)
In the wake of Lemonade’s giant seed round, the tech industry is buzzing thinking about the potential of disrupting insurance. Whether it’s peer to peer models or microinsurance, Silicon Valley is coming.
5. Nasdaq Linq Enables First-Ever Private Securities Issuance Documented With Blockchain Technology (Nasdaq)
Transaction by Chain.com Marks Significant ‘Proof of Concept’ and Major Step Forward in Use of Blockchain. Blockchain Holds Potential for 99%.
2015 was in many ways a watershed year for fintech.
According to Pitchbook, it looks like 2015 will finish with close to $8 billion worth of venture capital invested in financial technology startups. To put that into perspective, there was $4.7 billion worth of fintech investments in 2014. It looks like there will be close to $10 billion of M&A done in 2015, as well.
Based on our coverage, here’s what we believe to be the top 10 most important fintech stories of 2015.
Listen to the FULL episode
MORE RESOURCES
Top 15 fintech stories of 2015 (Forbes) — this was our original story that we based this podcast on
[alert type=yellow ]Every week at Tradestreaming, we’re tracking and analyzing the top trends impacting the finance industry. The following is a list of important things going on we think are worth paying attention to. For more in depth trendfollowing, subscribe to Tradestreaming’s weekly newsletter (published every Sunday).[/alert]
1. Tradestreaming’s 2016 list of the top 20 insurance startups (Tradestreaming)
Insurance technology, or insurtech, startups are popping up everywhere and a handful of them have raised significant capital. Who’s on their way to success in the space? We put together a list of 20 (+5 honorable mentions) top insurance startups in 2016.
2. 10 B-School Experts Reveal Predictions For Finserv Disruption (BusinessBecause)
10 B-school professors weigh in on where they think innovation is headed in financial services
3. Bitcoin is Entering the Age of Practicality (CoinDesk)
The blockchain is essentially a database. It may be the Liam Neeson of databases, but still it’s a database.This new age of practicality must be filled with companies solving real problems – problems that could not be solved before the gift Satoshi left for us (before returning to his alternate dimension)
4. What’s Expected for Fintech 2016? A Special Roundtable [AUDIO] (Bank Innovation)
What does 2016 hold in store for fintech, payments, and banking innovation? Matt Harris, managing director of Bain Capital Ventures, and Brian Roemmele, CEO of Pay Finders and a noted payments analyst, joined Bank Innovation to discuss just that
5. Can Fintech Fix Financial Services? (TechCrunch)
“The thing most in need of innovation in the financial sector is the nagging feeling on the part of the everyday customer that somewhere, somehow, he is getting screwed”
By many accounts, fintech had a massive year in 2015.
According to Pitchbook, it looks like 2015 will close with close to $8 billion worth of venture capital invested in financial technology startups. To put that into perspective, there was $4.7 billion worth of fintech investments in 2014. With the recent announcement that Global Payments would acquire competitor, Heartland Payments, it looks like there will be close to $10 billion of M&A done in 2015, as well. New York was the top destination for investment capital, with 93 local companies landing investments throughout the year.
Here’s a slidedeck we put together of the 15 most impactful stories in fintech throughout 2015. To dive deeper, please read our column published on Forbes today.
[alert type=yellow ]Every week, Tradestreaming highlights startups in the news, making things happen. The following is just part of this week’s news roundup. You can get these updates delivered direct to your inbox by signing up for the Tradestreaming weekly newsletter.[/alert]
OTAS Technologies’ Tom Doris is creating machines to do (part of) a trader’s job (Tradestreaming)
Traders are going to seeing a lot more AI and automation on the trading desk
After Fed, fintech hikes rates, too (Seeking Alpha)
Responding to the Fed’s rate hike last week, Lending Club ($LC) boosts rates on new loans on its platform by 25 basis points. Speaking to the WSJ, CEO Renaud Laplanche says it will be company policy to move in lockstep with the Fed’s future moves
Moven Launches E-Gifting and Affiliate Programs (Bank Innovation)
The banking service Moven is expanding its marketing efforts as 2015 comes to a close. The startup has launched an e-gifting service for the holidays, as well as an affiliate program
Gusto, Formerly ZenPayroll, Closes on $50 Million Funding (Finovate)
According to payroll and benefits provider, Gusto, these funds are part of the Google Capital-led $60 million Series B round announced in April
Insurance as an industry has been one of the last to be reimagined in the Internet era. That’s all changing now: entrepreneurs and institutions are investing heavily to turn out the next generation of insurance companies from the ground up. Institutional capital is betting that this new class of insurance companies will make a dent in the multi-trillion insurance industry.
Industry experts like Santander’s Pascal Bouvier point to insurance tech as one of the last, and ripest, fields for investment capital in 2016. Indeed, in 2015, over $800 million of risk capital was invested into startups in the insurance technology, now called, insurtech, space.
Here’s a quick rundown on the state of fintech, investments, and the digital disruption of the insurance industry:
The US insurance industry accounts for $1 trillion, or approximately 7 percent, of gross domestic product (US Treasury)
At $831.5 million, investment in insurance tech this year is already up nearly 10 times what it was in 2010 (CBInsights)
Insurance technology is a broad field that includes all different types of insurance, distributors, risk and regulatory managers, big data and enabling technology.
One of the things that makes this surge in interest and money backing insurtech startups is that it’s bring driven by outsiders. The same disruptive force emanating from Silicon Valley that’s changing transportation and logistics (Uber), music consumption and distribution (Spotify), and travel and lodging (Airbnb) is now turning its sights on one of the oldest and largest economic sectors: insurance. We’ve seen both industry insiders and talented outsiders enter the industry and expect that trend to continue.
We’ve compiled a list of the top 20 insurance startups worth keeping tabs on throughout 2016. Compiling top lists are tough — like in most fields, there are way more than 20 companies that deserve such recognition. The methodology we used in compiling this list included startups who’ve raised over $2 million, had a strong signal ranking on AngelList, and had a relatively robust Crunchbase profile. We also attempted to create a broad list that was inclusive of different approaches to impacting the insurance industry and therefore, we limited the number of startups doing something similar (say, direct distribution to consumers, for example). So, to that extent, this is a subjective list. For those that didn’t quite fit but were worth noting, we created an Honorable Mention category at the end of the list.
[alert type=yellow ]Every week, Tradestreaming highlights startups in the news, making things happen. The following is just part of this week’s news roundup. You can get these updates delivered direct to your inbox by signing up for the Tradestreaming weekly newsletter.[/alert]
Pave Raises $300 Million In The Latest Online Lending Push (WSJ)
Interest rates, schminterest rates. The flood of credit flowing into online lenders just won’t stop.
What digital wealth management can learn from successful online brokers with MyVest’s Charlie Haims (Tradestreaming)
Charlie Haims has been influential in the success of Internet brokerage and now heads up marketing at MyVest – a tool that migrates wealth managers online, giving them their own “robo” solution.
Mitsubishi UFJ Ties Up With Fintech Venture on Investing App (Bloomberg)
Mitsubishi UFJ struck a deal with a financial technology company in a bid to boost investment trust sales by providing information through a smartphone app.
nTrust’s Rod Hsu on differentiating in the competitive payments space (Tradestreaming)
nTrust bridges payments across borders in its own way and is gunning for leadership globally from its Canadian home base.
Trulioo Raises $15M from American Express, Others (TechVibes)
Trulioo has raised $15 million from American Express Ventures and existing investors. Read Tradestreaming’s recent interview with Trulioo founder and CEO here.
Bizfi Nabs $65M In New Funding (PYMNTS)
Alternative small business lending platform Bizfi announces $65 million in new funding.
TransferGo secures $2.5M investment round (Finextra)
TransferGo has secured a $2.5M seed round led by Mark Ransford, former investor at Apax Partners; Voria Fattahi, former investor at Kinnevik; Clive Kahn, former Travelex CEO; and Richard Tudor, former partner at Exponent.
Yirendai IPO Could Pave Way for More Fintech Listings (WSJ)
Chinese online peer-to-peer lender Yirendai raised $75 million in an IPO on the New York Stock Exchange, opening the door to a possible wave of fintech listings.
We’re here to help people access, move, and use their money — instantly. Whether you’re squaring up with a friend, or supporting loved ones overseas, you can use nTrust to transfer money through your mobile phone, tablet or desktop to anyone, anywhere. Send money across the table or around the world, without expensive fees or inconvenient delays. It’s about leveraging technology to liberate money and create a world of connections between friends, families, and businesses.
Payments is getting really competitive. How do you differentiate versus other players?
The retail payment space is certainly crowded and competitive. We play in a different space of payments; we focus on person-to-person transfers. Without being tied to any financial institution or instrument, nTrust provides an agnostic means to move money to others, which extends to 20 countries globally. In practice, you could have a Canadian, Australian and United Kingdom bank account linked to your nTrust Cloud and move money easily between them, which is a completely different model than other players on the market.
While the funding side is ubiquitous and flexible, the beauty comes from being able to freely, securely and instantly move money (even micro amounts) to others. The platform is built on a social premise and elements are incorporated to bridge the gap between finances and social media. A product is only as good as the experience it offers, which is why we prioritize UX as the forefront of every feature we implement. As an example, traditional account statements provide a load of filtering and search capabilities but in reality, only a fraction of those are used on a frequent basis. So we’ve taken a different approach in using custom hashtags for transactions, which not only leverages the social aspect but can also quickly filter the important activities that mean something to you.
Moving money should feel seamless and easy so you can focus on other things in your life.
Why is the space attracting so many entrepreneurs and VC money?
I think there are two parts to this – the generation gap and access to technologies. The movement of a new generation of consumers is forcing a shift in the way money and payments are viewed in the financial sector. Things aren’t what they use to be and the need to keep pace with this change in financial interactions isn’t happening fast enough in the incumbent system. That’s why we are seeing more initiatives being taken in this space by entrepreneurs, leaders and VCs. As the cost of entry is becoming more and more affordable, there is less risk to start an initiative. Seeing disruptions happen in other industries, like hospitality (AirBnB) and transportation (Uber), creates a new wave of seekers that know changing the way the world thinks isn’t something that requires loads of overhead and capital. As more startups sprout up, it becomes increasingly difficult to ignore this movement.
What’s it like building a global fintech platform from Canada? What do you think are its strengths and challenges?
Canada has a great talent pool, financial and regulatory infrastructure, and an environment that helps foster innovative thinking. These provide a strong backbone in creating great standards when looking at growing out globally. While these are fantastic ingredients for a start up, this also has challenges in keeping pace with change. As much as we wish to push the boundaries of what our product could become, we need to ensure it plays nicely in the regulatory environment as well. This extends beyond just regulations; it means involving industry players big or small, like FIs, the private sector, and local partners. We want to align and amplify the innovation output. This also means established companies looking to support this movement must be open-minded about collaborating and executing innovation more quickly in order to stay ahead of the curve.
What should we expect to see from nTrust in 2016?
As we continue to push forward on the P2P Canadian market, we are working with various providers in the space to further tune an end-to-end, seamless experience. Concurrently, we are in discussions on an international scale to provide a greater reach and access points for consumers in other markets. With the world feeling smaller and border lines becoming less visible, nTrust is poised to become a leader in connecting people financially no matter where they are.
Investors used to be satisfied investing at home, but technology seems to be opening up investment opportunities internationally. What’s driving that and how do you think that plays out?
Robert Cortright – CEO, DriveWealth
US investors have always had the ability to invest globally through the US ETF market and, in the last decade, we have seen many US investors buy into “BRIC” assets through the US listed securities market. However, international investors have not had access to the US listed securities market, which offers access to global ETFs and ADRs in a liquid and relatively secure environment.
Over the last decade, emerging market individuals have built a wealth of investible assets and they are looking for a place to invest those assets as their domestic markets are becoming more volatile and continue to be limited in size and market cap. DriveWealth gives these individuals the opportunity to open a US-based, SIPC protected brokerage account and build globally diversified portfolios.
Why is it important for investors to access to international investment opportunities?
Diversification is important to every investor, but US investors have historically had the most choice. It’s important to give all investors the same choice. Diversification is one of the most important tenets of investing and goes beyond asset classes and sectors- a well balanced portfolio will give investors exposure to different geographic locations as well. With a platform like DriveWealth, investors all over the world can build globally diversified portfolios of US listed stocks, ETFs, and ADRs.
Why is it important for the institutions that service investors to provide international investment opportunities?
As I mentioned earlier, investors in emerging market economies are looking for a place to invest their wealth and the US listed securities market provides an opportunity for them to do so in a liquid, regulated environment. By gaining access to the US listed securities market through a US-based brokerage account, international investors will have the ability to build globally diversified portfolios.
Furthermore, many large international companies, such as Alibaba, are listed in the US, which means that Chinese investors cannot own Alibaba without a US brokerage account that offers the ability to trade ADRs of global companies. DriveWealth gives investors around the world this ability.
Increasingly, customers are realizing that they can get global exposure through US listed ETFs and ADRs for an affordable cost. The US stock market is becoming an attractive place for people, domestic and international, to deposit money.
Doctors don’t go into surgery without practice — but investors seem to do that. Why? Is there a better way?
Investors need to be financially educated, especially if they are investing in the US Stock market for the first time. Often, investors begin investing without practice because they simply don’t know that there are resources out there to help them. In the past, people weren’t given the knowledge and tools to invest affordably and with confidence. This is one of the reasons which DriveWealth has developed an intuitive way for people to invest.
With the release of our Passport 2.0 investing app, DriveWealth is offering fractional shares to help people build diversified portfolios over time by investing a fixed dollar amount in the companies they know. With Passport 2.0, people don’t have to be stock pickers or experts, they can invest in a portfolio over time and get the benefits of dollar cost averaging. In addition, investors will have the opportunity to invest in the products they use in their daily lives.
You’re building a global platform. For fintech companies looking to expand internationally, do you have some advice on build/buy decisions? Things you would do differently in retrospect?
Financial services is a highly regulated industry. Most fintech companies focus on product because it doesn’t require a deep, full-carrying license to operate, but the real key is distributing all the great financial services products that the US market has to offer. A strong fintech company also has strong licenses behind it. If businesses have really great financial products, they should look to partner with someone that can distribute their products.
At DriveWealth, we believe strongly that “FinTech” disruption will come thru the global retail distribution channels rather than the traditional “face to face” banks and brokerage business relying on hired registered representatives. We view ourselves as a platform where we aggregate retail investors and give them access to the best financial products. With ecommerce firms expanding rapidly in the emerging markets and clients having smartphone technology in the palm of their hands, customers will expect to have the ability to execute financial transactions with the few clicks on a mobile application.
What’s in the plans for 2016?
We will be releasing Passport 2.0 in early 2016. With Passport 2.0, investors will have the ability to invest real-time in fractional shares and create dollar-based, self-directed portfolios. If you want to start investing with $20 and own 10 stocks, for example, you can do it. The introduction of fractional shares and dollar-based investing means that our investors don’t have to be speculators. They can build well-diversified portfolios for a low, fixed cost and become disciplined investors and savers. We believe that giving retail investors globally affordable access to save and invest through their mobile phone is extremely powerful.
Also, as wealth is transferred from baby boomers to younger generations, it becomes increasing important to offer intuitive investing tools in a mobile environment to cater to the lifestyles of our mobile-first, cashless society. With Passport 2.0, younger generations of investors will be able to manage their entire financial life from the palm of their hand. Owning a Brokerage account providing access to the powerful products of the US Securities markets will be a key to their long term success.
[alert type=yellow ]Every week, Tradestreaming highlights startups in the news, making things happen. The following is just part of this week’s news roundup. You can get these updates delivered direct to your inbox by signing up for the Tradestreaming weekly newsletter.[/alert]
ApplePie Capital’s Denise Thomas on enabling investors to lend money to the right franchises, franchise owners (Tradestreaming)
Online lending marketplaces are changing the way capital is deployed and ApplePie has an interesting approach: small business loans to franchisees.
Cookies Wants To Become The Venmo Of Europe (TechCrunch)
Cookies is all about paying your friends without any fees. And now it intends to massively expand in Europe.
Trulioo’s Stephen Ufford: “Missing element to provide financial services for the 2.5 billion unbanked lies in a digital footprint” (Tradestreaming)
User identification is a seemingly simple problem, yet it stands in the way of truly opening up fintech applications. Until now, doing it well has remained elusive. Trulioo is trying to change that.
Number26 Launches Its Bank Of The Future In 6 New Countries (TechCrunch)
If you don’t like your current bank, Number26 may appeal to you. The German startup has been trying to reinvent the average banking experience in Germany and is now expanding throughout Europe.
Wealthsimple acquires online brokerage pioneer ShareOwner (Newswire)
Largest Canadian roboadvisor ($400M), Wealthsimple acquires online brokerage, ShareOwner.
SoFi’s Mike Cagney on valuation (Business Insider)
SoFi CEO Mike Cagney thinks the company could be a $30 billion business. Will he be right?
Startups raising/Investors investing
Australian Fintech Tyro Payments Raises $72M Led By Tiger Global (TechCrunch)
Australian financial tech company Tyro Payments plans to challenge the country’s leading retail banks after scoring AUD $100 million (about $72 million).
Bee Raises $4.6 Million to Deliver Banking Services (WSJ)
Banking startup Bee (which provides bank accounts, debit cards and financial services aimed at people who live in low- and middle-income neighborhoods) secures investment capital.
Clearpool secures $8 million investment (Finextra)
The electronic trading software development and agency execution business announced it has received an $8 million investment from growth equity firm, Edison Partners.
SMB Lending Technology Provider Mirador Secures $7M (Let’s Talk Payments)
Lending as a service getting more traction…and more money. Companies like Mirador help banks compete in online lending.
Q2 Acquires Social Money in $10 Million Deal (Finovate)
Formerly known as Smarty Pig, Social Money helps financial services companies better engage their customers by offering them savings solutions such as GoalSaver, a customized, bank-audited goal-saving system.
Startup Tracker’s Jeremiah Smith on how Twitter is a great distribution medium for his complement to CrunchBase (Tradestreaming)
Startup Tracker is changing the way investors and competitors research startups.
Prosper’s BillGuard Unlocks Premium Features for All Users (Finovate)
On the heels of being acquired by Prosper, the expense-management and fraud-tracking application made some of its most popular premium features available for free.
Green Dot to Enter Lending Space with Loan Marketplace (Bank Innovation)
Prepaid player Green Dot is stepping into the lending game with a marketplace for loans. The move will happen in 2016, CEO Steve Streit announced this week.
