With a growing level of venture capital funding, Fintech is scaling up and diversifying beyond its monoline roots. In parallel traditional financial services providers are joining in. The focus is moving towards Asia – in terms of market opportunity and the domicile of many of the world’s largest Fintechs.
Innovation is the key success factor within the Fintech industry. It combines technology with financial services to create new products and services that disrupt the market by creating new values to a changing clientele. Keeping an eye on growing and emerging businesses is critical in this fast-paced environment. Fintech companies must understand and track their competition. Likewise, more traditional financial services players must plan how to respond or get involved.
Fintech100 – a collaboration between KPMG International and H2 Ventures – brings traditional players and pure Fintech companies together and ranks the Top 50 established and the Emerging 50 Fintechs globally. It explores the key trends and characteristics that are driving success – taking into account total capital raised, the rate of capital raising, geographic diversity, sectoral diversity, and the x-factor (the degree of product, service and business model innovation).
Features that characterize the top performers
In terms of regions represented, Chinese Fintech companies still occupy three places among the top 10 closely followed by India. Overall, 42 of the top 100 are from Asia-Pacific, compared to 26 from EMEA and 22 from the Americas.
As in previous years, payment and transaction services still account for over a quarter of the Fintech companies represented in the top 100. These are followed by wealth (19), insurance (17) and lending companies (15). Interestingly, the number of wealth, insurance and multi-sector companies is growing quicker than the payment and lending business which were basically the more traditional areas of innovation with regard to Fintech in previous years.
The analysis of the composition of the new Top 100 also shows an increasing number of Fintech companies rapidly globalizing their business. Early movers in Fintech innovation with previous monoline propositions are diversifying into a broader set of customer needs. Fast growing open banking services are driving competition. Fintech companies use their access to customer data to create faster, more personalized and more innovative services corresponding the needs of their clients. This is best seen at so-called neo-banks. Neo-banks have digital as the only or predominant channel for engaging with customer and challenge either the products, the user experience or the business models of traditional banks.
The competitive situation but also the possible innovations lead to a dynamic market place for financial services.
The key highlights from our research
The study presents the following main highlights of services offered by the top 100 Fintech companies in the financial services industry:
- Capital continues to fuel innovation: The Fintech100 raised more than USD 18 billion in venture capital backing in the past 12 months, and USD 71 billion over their lifetimes.
- The leading players are attracting the greatest share: The average raised by the top ten Fintechs was over USD 1.2 billion.
- Innovators are scaling up: The companies on this list serve over 2.5 billion customers globally – giving them ever-greater scale and innovation opportunities.
- China is still strong, but India is joining the top team: China continues to lead the Fintech100, but India has massive potential to leverage Fintech and I believe we’re seeing only the beginning of India’s influence in this market.
- Fintech is managing to normalize at the same time as posting rapid growth: Fintechs have driven huge innovation, but they are not all start-ups. An increasing number of traditional banking incumbents and global technology giants are Fintech innovators – and they already have the benefit of scale.
- Traditional industry boundaries are blurring around the customer: We expect more non-financial services players to enter the industry. This is as companies from other industries see potential to solve customers’ financial services issues – and are helped by more attractive regulatory and policy positions such as virtual bank licenses and open banking.
- Fintechs are globalizing: A growing number of Fintechs are rapidly globalizing, using the scale they have built in their home regions to look further afield for future growth.
- They are moving from monoline to mainstream: The early Fintech innovators had monoline propositions. Banking licenses are helping Fintechs to diversify, as regulation is facilitating more competition and greater customer choice.
- Open banking is changing the landscape: Designed to put customers in control of their data, open banking is benefiting Fintechs as they can access this data to create more personalized experiences and customer-focused services. Open banking promotes competition, which drives innovation.
- Southeast Asia is the latest hot spot: There are more than Asia Pacific-based companies on the list than from any other region. Of the 11 companies that raised more than USD 1 billion in the past three years, eight are from Asia Pacific.
For further insights you may read the full Fintech100 report.