November 20, 2015
While exposure to FinTech companies grows, concerns over regulatory and reticence by corporate/institutions to adopt new technologies appear to be key roadblocks for growth in the coming year.
"The attendees at the FinTech Mashup event validated what FinTech companies around the world have been voicing in recent years—an effective regulatory and compliance strategy is critical to their ultimate success, said Bruce Wallace, Chief Digital Officer of SVB Financial Group. As innovators continue to redefine innovative operating models across the financial services sector, it is important to us to help our clients navigate challenges as they identify opportunities to improve financial services for consumers and businesses.
FinTech startups, particularly companies most interested in disrupting traditional financial services, anticipate struggling with regulatory issues. We’ve experienced many of the milestones FinTech has already achieved in 2015. This year I’ve reported FinTech advancements improving the sustainability of Botswana, one of the most rural parts of Africa, and TfL (Transport for London) adopting contactless technology for commuters; to impede such progress could affect the whole industry on a global scale.
Below are the results from a survey of 101 FinTech company founders conducted on November 3 by Silicon Valley Bank (SVB).
Findings from the survey:
- Regulatory hurdles challenge FinTech: Nearly half of the survey respondents (43%) said that regulatory issues were their biggest impediment, followed by reticence by corporations to adopt new technology (24%), changing consumer behavior (18%) and access to funding (15%).
- Growth anticipated in the US: Despite regulatory hurdles, the United States is viewed as the market with the greatest opportunities for growth and expansion for financial technology (36%), ahead of Asia (22%) and Europe (14%).
- Experts mixed on blockchain: Respondents were divided as to whether blockchain is a technology looking for a problem to solve (46%) or one that is providing a solution for financial institutions (54%).
- Funding is available: The majority of respondents (55%) believe that the financial technology sector is funded appropriately. In fact, only 17% feel that the sector is currently over-funded.
- Industry disruption to continue: When asked to identify the greatest opportunity for FinTech disruption, infrastructure (including blockchain and API) was the top pick according to 24% of respondents. Results were nearly evenly split between payments (23%), insurance and alternative lending (both at 20%). Wealth management and robo-advising were identified by just 13% of respondents.
FinTech continues to be a growing segment within the payments ecosystem. Financial innovation is running the gamut of FinTech advancements, from blockchain technology and data API integration to payments, lending, wealth management and mobile banking. It is incumbent on the future of banking and financial services to be immersive to technology.
About Silicon Valley Bank:
For more than 30 years, Silicon Valley Bank (SVB) has helped innovative companies and their investors move bold ideas forward, fast. SVB provides targeted financial services and expertise through its offices in innovation centers around the world. With commercial, international and private banking services, SVB helps address the unique needs of innovators. Forbes named SVB one of America’s best banks (2015) and one of America’s best-managed companies (2014).