A record number of fintech startups coupled with significant investment in fintech has left no doubt that this industry is here to stay, and its impact can be felt in financial markets across the globe.
The Numbers Tell the Story
A recent report issued by Deloitte Center for Financial Services provides undeniable evidence of how strong the fintech market has become. Deloitte analysts were interested in identifying the financial industry sectors where fintech startups have been the most vigorous. They asked which platforms were performing the best and which international markets were the most fertile ground for fintech development and expansion.
The data results were quite confirming of a genuine industry breakthrough. More than 5,000 fintech companies were launched over the past 20 years. 40% of these new-starts emerged during the years 2012-2015. However, 2017 saw a slowdown in the number of startups. Nonetheless, it is evident that fintech platforms have made their way into the real estate, banking, insurance and investment sectors.
Fintech Investment Evidences Strength of the Industry
Fintech investment remains strong despite the decline in number of startups. As a matter of fact, investment in fintech companies is on the rise across all business sectors, other than insurance. Of more importance, the kind of investment being made demonstrates that fintech has become a mature player in the business marketplace. Investments have moved beyond seed capital to include later-stage venture capital funding.
China and the United States showed the most fintech investment activity according to the study. But the pattern of investment is very different in the two countries. While the total amount of investment is approximately the same in China and the US, Chinese investment is more focused on a handful of fintech companies.
Are Fintech Companies Replacing Traditional Financial Institutions?
The Deloitte study reveals that in spite of the maturation of the fintech industry, traditional financial institutions are not losing market share. However, it is undeniable that fintech companies are here to stay. The focus, therefore, is on how to incorporate and collaborate with the fintech industry.