December 20, 2016
As we approach the end of an eventful 2016, Let’s Talk Payments presents this list of the top 11 most popular articles published on LTP in 2016 with regard to page views.
Knip is an innovative digital insurance manager that provides users with an easy-to-understand overview and analysis of existing insurance policies, tariffs and services.
Clark is an insurance platform that provides a transparent, cheap and comprehensive insurance cover.
Temenos Group AG, headquartered in Geneva, is a market-leading software provider that partners with banks and other financial institutions to transform their businesses and stay ahead of a changing marketplace. Temenos customers significantly outperform their peers. Over the period of 2008–2014, Temenos clients enjoyed a 31% higher return on assets on average, a 36% higher return on equity and an 8.6 percentage point lower cost to income than financial institutions running legacy software. Over 2,000 firms across the globe, including 38 of the top 50 banks, rely on Temenos to process the daily transactions of more than 500 million banking customers. Read more.
Increasing data breaches, illegal hacking and identity theft cases are raising the demand of the fraud and authentication industry. No entity seems to be immune – from small banks to large health insurance companies; organizations of all sizes in many industries are affected. Criminal fraudsters are illegally accessing millions of consumer credit cards and private data files, even while new payment systems are evolving with new technology and capturing consumer spending habits. This is further amplified by the advent of mobility. As the industry is moving towards EMV chip technology, the CNP (card-not-present) fraud is increasing compared to the fraud at physical POS systems. Read more.
FinTech companies around the world have now reached the potential of substituting almost any service from the banking value chain. The legitimate question to be raised then is: if there is a startup for each service a bank provides, do we really need banks? The banking industry has been and is a massive machine providing comprehensive financial services. Any bank nowadays can serve any financial need for the eligible population. The word ‘eligible’ plays a vital role here. One of the core differences in approach to financial services between banks and FinTech lies in democratization. FinTech companies often aim to serve a noble goal of global financial inclusion and making financial services more accessible for those not fitting into the credit score-based estimation of eligibility for another loan. Read more.
I am back to writing about one of my favorite topics—APIs. In 2013 and 2014, I wrote some of the very early pieces on how APIs are being used to build next-generation products and allowing developers to reduce the time to market. I also talked about how banks will take a very long time to open up their APIs. Open APIs would allow third-party developers to create helpful services and tools that customers can utilize. Some banks have started this journey and we will discuss that in our upcoming reports and other announcements. But to be technically accurate, right now, banks are just looking to expose their APIs to some startups and companies that are working with them closely. In simple words, they aren’t like Stripe or Facebook APIs which are completely open and fully self-serve. Think about the startup contests, accelerators that banks sponsor. Also, think about Silicon Valley and London startup visits by banks and other engagement models. Now that every now and then they are narrowing down on new startups to partner, they need to make available their banking APIs that the startups can integrate with and/or use for their applications. On this scale, things such as these would take years to implement. Read more.
BaaS (bank-as-a-service) is the new black. One week ago former Barclays CEO Antony Jenkins has launched a new startup that aims to modernize the back office technology used by banks. 10x Future Technologies is working on a cloud-based core banking system — the technology that allows banks to hold deposits and accounts. Essentially, it’s the heart of banking. Antony Jenkins, who founded the company and serves as CEO, says in the statement: Our core digital banking platform, based on advanced data modeling and database design, will allow financial services providers to develop a much deeper understanding of their clients, cut costs and deal with regulation. Read more.
I am sure that you have heard of one of the only profitable FinTech unicorns in the world: Klarna. A customer making an online purchase enters only their email address and zip code on an e-commerce merchant site to buy an item. Klarna pays that merchant immediately and then collects the amount due from the consumer within 14 days. Imagine the amount of work the engines in the background are doing. Today, I will be talking about that area/segment a bit. The use of analytics in its many forms – big data, data science and many more – is not a new concept in FinTech. The growth in data or data explosion is a function of multiple technological advancements. Adoption of cloud, mobile technologies, apps, wearable devices, intelligent/smart networks, and Internet penetration/usage are some of the major factors for growth in overall data. To put this into perspective, IDC estimated that the digital universe is doubling its size yearly and would reach 44 ZB in 2020 from 4.4 ZB of data generated in 2013. It also forecasted that the big data technology and services market will grow at a 26.4% compound annual growth rate to $41.5 billion through 2018, or about six times the growth rate of the overall information technology market. The ability to draw insights and the ability to optimally monetize available data would place companies in a unique position challenging established rules and processes. Low-cost storage technology, smartphone penetration and cloud are underlying forces which propel the requirement of big data and analytics. Read more.
Borderless innovation is a broad topic, which includes global expansion, global networking, cross-country laws, global business opportunities and partnerships and a lot more. A few FinTech startups have been successful in global expansion. Unlike startups in other fields such as taxi aggregators (think Uber) or productivity apps that expanded very quickly across the globe, it is difficult for FinTech companies to do the same. Since technological advancements allow companies to operate globally even while being physically located in one country, it presents a great opportunity to grow revenues through global expansion. Read more.
If we thought 2015 was a great year for FinTech, 2016 is going to surprise us. As the LTP team has been actively exploring the FinTech ecosystems around the world, we have seen some outstanding examples of the world’s most forward-thinking and prosperous FinTech hubs such as London, Singapore, Silicon Valley, New York, etc. The global FinTech has evolved in a way that the Western world overwhelmingly dominates in the amount of investments made into deploying innovation. However, it doesn’t mean that European or Asian FinTech is far behind. Read more.
It won’t be wrong to say that APIs are powering a lot of new FinTech innovation. Apart from the huge drivers for FinTech innovation that we have seen – mobility, cloud, commerce innovations, analytics and big data – I think the use of APIs is another driver that is helping FinTech a lot. Most FinTech companies now float their products on cloud services so that they can enable access to API data as if it was an on-premise database. In the second half of the article, you will see 71 FinTech APIs that you could use today. I have talked to most of them and I am really excited about the value they can add to the FinTech ecosystem. Read more.
For a long time in the blockchain space, we have seen a wide range of financial and non-financial applications as well as an array of promising companies leveraging the distributed ledger technology. Blockchain certainly doesn’t suffer from the lack of attention from banks and entrepreneurs, which explains the pace of adoption and experimentation.
Not only banks but former pure tech players like IBM and Microsoft are also exploring the opportunities blockchain presents. Let's look at three examples of BaaS solutions taking enterprise-grade experimentation with blockchain to a whole new level. Read more.
The financial industry in the US is the most liquid and the largest market in the world. In 2014, finance and insurance represented 7.2 percent of U.S. GDP. The banking industry in the US supports the world’s largest economy with the greatest diversity in banking institutions and concentration of private credit. The banking industry has awakened to risk management, especially since the global crisis during 2007–08. But what are the day-to-day risks and the long-term risks faced by banks? Why do dedicated risk management practices at companies like FIS Global even exist? Which risks are their risk management products and services meant for? Here’s a list of 8 risks faced by banks: Read more.
New York is rapidly growing as one of the world’s hubs of innovation. Some of the hottest FinTech startups are represented in New York and new entrants can find endless opportunities in the global trading center. The LTP team has been following the development of the industry and some of the most notable FinTech companies represented in the city. Read more.
A research study by Accenture and CB Insights stated the fact that global investment in FinTech ventures tripled to $12.21 billion in 2014 in one year. The emerging trends for FinTech include lending, money transfer, APIs, machine learning, blockchain, bitcoin, risk & security, biometrics authentication, payment processing and more. FinTech is evolving rapidly not only in the US but also in countries like China, India, Singapore, the UK and Israel. Investors are continuously looking for the next big thing in the financial industry. While there are VC firms like Green Visor Capital and BBVA Ventures who are exclusively focused on investing in FinTech startups, there are big players like Accel Partners and KPCB who are increasingly investing in FinTech startups. We have compiled a list of 61 FinTech VC firms below, in no particular order of ranking, who either have FinTech as one of their focus areas or who invest exclusively in FinTech. Needless to say, while we have researched investments carefully, this list may still not be exhaustive, so any feedback on inadvertent omissions or additions is always appreciated. Read more.
It won’t be wrong to say that APIs are powering some of the FinTech innovation engines. APIs are the answer to the question of how startups are able to build products faster these days. Most FinTech companies now float their products on cloud services so that they can access API data like an on-premise database. API approach lets fresh-off-the-boat tech companies and ever competitive developers innovate much faster on the built platform, as opposed to keeping their app development limited to compliance-inhibited, resource-strapped IT organizations. Read more.
A relatively new term, RegTech refers to a set of companies and solutions that address regulatory challenges across industries, including financial services, through innovative technology. RegTech solutions are agile by nature due to the complexity and momentum of regulatory transitions. Traditionally, the technology was developed to be robust. However, RegTech can’t afford the luxury to deliver a solution for static requirements—it has to be a self-learning machine. Read more.
Chair-managing director of one of the Big Four banks of India, State Bank of India, Arundhati Bhattacharya is a real role model to the women in her country. Forbes listed her as the 36th most powerful women in the world in 2014 and the 30th most powerful women in the world in 2015. Beginning her career at SBI as a probationary officer at the age of 22, Arundhati Bhattacharya has now been working with SBI for around four decades. Her sincere and loyal service to the country’s largest lender made her the youngest and the first female chairperson at State Bank of India. She has also introduced a two-year sabbatical policy for women in the company, which will help the women employees in State Bank of India enormously. Read more.
The global market of online payments is one of the fast growing in 2015. According to the Royal Bank of Scotland research, an overall growth rate of global non-cash transactions is 7.6%. Among the top ten countries with the fast-growing non-cash rates are Russia (33.4%) and China (37.7%). It is a large, growing, and profitable segment of financial services. Read more.
Remittance (money transfer service) has always been dominated by companies like Western Union and MoneyGram. But new players and startups are trying to make the scenario competitive by offering different forms of money transfer services. With the advent of digital currency and blockchain technology, companies are not holding back in adopting currencies like bitcoin to enable remittance services. Read more.
In financial markets, there’s always a mechanism to correct an attack. In a blockchain, there is no mechanism to correct it — people have to accept it. – Robert Sams, founder and chief executive of London-based Clearmatics.
Blockchain technology has the ability to optimize the global infrastructure to deal with global issues in this space much more efficiently than current systems. – Marwan Forzley, Founder of Align Commerce
Everyone is talking about blockchain, the new technology in the FinTech Industry. The concept of blockchain has energized the financial services industry globally. The concept has already brought a disruption in the financial industry. LTP brings to you the overview, technology, application areas and use cases of blockchain.
What is blockchain? Read more.