Introduction to
FinTech
Varun Kumar
Session Agenda
WHAT IS FINTECH?
WHY NOW?
FINTECH LANDSCAPE
WHAT’S NEXT?
What type of FinTech’er are you?
What type of FinTech’er are you?
A well-known person in the FinTech space once commented that if you
couldn’t dine out on FinTech every night – you weren’t doing FinTech
right. From bank elevators, to the free beer at co-working spaces – it
would be hard not to bump into someone who works at a fund or an
accelerator, grinding away at a startup or a bank or even just a fanboy
looking to ‘comment’ their way into a glam job at Nirvura.
• But where do you fit in?
• But what type of FinTech’er are you?
Well, take the quiz and find out!
Banks and bankers are: Your work-space is:
1. Trying really hard – really, they are. 1. Top floor, great view, coffee
2. Dinosaurs. You welcome disruption machine always works. (You have a
and disintermediation. (But you are full pension and lots of airline
also looking to connect to the head points)
honcho at Mega Global European 2. Co-working space that has a beer
Bank. You ask often for warm fridge and an aloof receptionist. You
intros). get a new delivery of laptop stickers
3. No one you know anymore. every month.
4. Bank? You don’t care about banks; 3. Kitchen table. You tend to send an
you just want your business to have email, around 3:00 pm, to see if
better insurance. anyone is free for a drink at TGIFs.
4. Pune/Bengaluru
Well, take the quiz and find out!
You aim to promote FinTech entrepreneurship by: You been in the industry for:
1. Welcome startups – they make the innovation 1. Two years. You used to work for a company
magic happen. You often need to jet off to that did that dating app. You ooze
another meeting to justify your existence to the innovation. That’s why you were hired.
board. You hope the startups have enough Post
It notes. 2. Since the 90s. Do you remember the 90s?
You didn’t have any grey hair in the 90s.
2. Your days are an endless rotation of meetups, You miss the 90s. The canapes were better,
Demo Days, roundtables, hackathons. You and the wine wasn’t delivered from Zomato.
comment on everything. If you can get a free
ticket you are there. (But you never sponsor 3. Before you were born.
anything – you don’t have the budget). 4. You run a dog walking service and have an
3. 5 years ago you were the CEO of a financial insurance app (Seriously, you really need
technology service provider. You think the Cab someone who can talk you through
Sav at the wine bar down the road is excellent. Starling’s Marketplace).
4. You need someone to talk you through Starling’s
Marketplace.
What
Exactly Is
FinTech?
What Exactly Is FinTech?
Finance + Technology
• A new technology that seeks to improve and
automate the delivery and use of financial
services
• A dynamic segment at the intersection of
financial services and technology, where
– technology-focused start-ups and new market
entrants
– innovate on products and services that are being
currently provided by the traditional financial services
industry
Banks and Fintech. For what reason?
Fintech offers banks access to technologies, brings new ideas
to market at speed, enables to add value from bank’s data and
changes bank’s culture.
Clearly, not all of today’s banks will survive. The survivors will be those that reimagine relationships with their
customers and partners.
Why So Much Hype
Around Fintech?
Rise and doom of any company or
industry is based on simple rules of
demand and supply.
The demand factors associated with
Fintech services are driven by the
consumers.
Supply factors have mainly been
from banks earlier and technology
giants, Fintech start-ups nowadays.
Consumer: New Behaviour & Transaction Methods
Is ‘at-ease’ using the mobile phone for every tasks
Is always ‘on the network’ - with social friends
Not afraid to transact practically anything on the internet
Prefers to ’use’ or ‘rent’ services rather than ‘own’
• Macro Economic: Incumbents caught in a tough place
Why Now? Big banks - have lost the perception of transparency
Access to IBs & PEcapital - cumbersome
Transaction speed - glacially slow - particularly at Investment Banks
Government :New regulations that aid digitization
Promoting digitization and open APIs in financial systems
Financial inclusion (in many parts of the world)
Reducing cash transactions
Simplification of regulatory processes
CUSTO MER T YPE FINT ECH T RENDS
Lending
Personal finance
Money transfer / FX / Remittances
Consumer
Payments and billing
Crypto
FinTech: Insurance
Wealth management
Segmentation High Net Worth (HNW)
Crowdfunding and other investment
platforms
Real estate
Infrastructure providers
B2B - small-to-medium Lending
enterprise (SME) Insurance
Payroll and accounting
Capital markets
Reg-tech
B2B - enterprise Infrastructure providers
Blockchain
Insurance
Fintech Segments
Key segments in which innovation is happening today:
• After explosive growth, the fintech
market is maturing. Now is the
time to see which companies are
here to stay. There will be some
The Current necessary consolidation and high-
profile failures.
State of
FinTech • New Trends and technologies are
emerging which will develop
further in 2020.
What’s happened?
2018 saw $128 bn invested
globally into Fintech. Investment in
the sector is expected to grow to
$310 bn by 2022, a 25% annual
growth rate.
Fintech vs Total VC: Out
of $254 Bn invested in
venture capital globally
in 2018, Fintech
accounted for $128 Bn.
What is
currently
happening?
Who are the players?
Evidence
Fintech
sector is
maturing
Three factors are contributing to the
maturing of the fintech sector:
The new technologies that helped fuel innovation
in this arena (e.g., artificial intelligence and cyber
defenses) are also maturing.
A lot of funds that invested in the first generation
of companies that tried to capitalize and build on
top of the destruction caused by the financial
crash in 2008 are reaching the end of their life,
and are thus getting their houses in order to
return money to their investors.
The macroeconomic situation, particularly in the
Europe (one of the most advanced fintech
markets) and in Europe, has deteriorated,
slowing down funding to younger and newer
companies.
The True Bank
of Future
WHAT’S NEXT?
The battle for deposits
REG-Tech
Unbundling the Paycheck
New investment platforms and
asset classes
Fintech meets real estate
Rise of impact fintech
Fintech firms are looking for their second act.
Firms are becoming more aggressive in expanding their
lines of business beyond their initial use case.
The Battle
For Deposits
Fintech moves from mono-line to multi-line
Fintech startups are rebundling products and services ahead
of their maturing customer base.
The Battle
For Deposits
• Fintech firms are looking to build their own chartered
banks.
• Fintech startups that want to replace the old guard of
banking are leveraging regulatory tailwinds and applying
for charters and licenses with respective regulators.
The Battle
For Deposits
RegTech, short for Regulatory Technology, is the application of emerging
technology to improve the way businesses manage regulatory compliance.
2008 financial crises is the moment Reg-Tech was truly born.
REG- TECH
Predatory debt is the opportunity for P2P lending firms.
Household debt balances have accelerated and total over $13 trillion.
Fintech firms are unbundling the paycheck to alleviate and prevent
predatory debt.
Startups are partnering with employers to offer salary linked benefits.
Unbundling
The Pay-check
Democratization of investments
Alternative investment apps will continue to rise in prominence among next-
gen investors.
New investment models will be created to open-up markets and create
asset classes.
New
investment
platforms and
asset classes
DEEPENING THE ROOTS IN THE REAL ESTATE
ECOSYSTEM
First, fintech startups digitized the mortgage lifecycle and created
alternative lending. (e.g. LandDophin, Blend, Clara)
As home values rise, fintech firms started moving into home
Fintech meets equity. (e.g. Unison, FIGURE, HomeTap, Point)
real estate And abstracting away the mortgage as startups look to make
cash offers for home buyers (e.g. FlyHomes, RIBBON).
Rent-to-buy: Startups look to enable gradual home equity
ownership (e.g. DIVVY Homes, VERBHouse).
Fintech is integrating home insurance deeper into the home
buying process. Also, look to disrupt the $15B title insurance
market. (e.g. States Titles, SPRUCE, Qualia)
THE “GREEN” STANDARD OF INVESTING
Going green” is not new, but there is renewed demand driving how ESG
(Environmental, Social, and Governance) scales.
With $30T from the ‘great wealth transfer,’ millennials will expect choices
that have a positive ROI & impact. Millennials are 2X more likely to make
sustainable investments than the average investor.
Rise of impact The first layer of impact fintechs are establishing green data credibility
for financial services firms.
Fintech The next layer of impact fintech will establish credibility with next-gen
investors, ahead of wealth transfer
Opportunity Space
Opportunity Space
Payments - Area where FinTech first started: Creating seamless
and secure digital payment infra. Still a growing area.
P2P lending is the fasted growing new form of capital raising.
Opportunity Space
Insurtech market decreased by 34% in 2019, while the number of deals increased by 25%
Crowdfunding is only a small but still growing segment within capital raising.
The deployment of robo-advisors in fintech will offer effective financial advice and automate
asset management, investments, and insurance claims processing.
Opportunity Space
Blockchain is getting more mature, however it’s still at very early stage (prove-of-concept). This is
a growing space. A large number of players innovating here in multiple verticals.
How digital finance could boost
growth in emerging economies?
Two billion individuals and 200 million
micro, small, and midsize businesses in
emerging economies today lack access
to savings and credit.
Delivering financial services by mobile
phone could benefit billions of people
by spurring inclusive growth that adds
$3.7 trillion to the GDP of emerging
economies within a decade.
