FinTechs in banking

FinTechs in banking

  • Trends & Vision

FinTechs are experiencing spectacular growth. Between 2014 and 2015, investment in this sector has more than doubled (+210%) in Europe to reach 10.9 billion dollars. This article discusses why BNP Paribas plays an active role in helping FinTechs imagine the future of banking.

Online banks, mobile budgeting tools, electronic payments and other crowdfunding platforms—did you know that FinTechs came up with almost all these innovations? Growing rapidly in the wake of the 2008 financial crisis, these startups use technology to reinvent banking and financial services. That’s why BNP Paribas plays an active role in helping them imagine the future of banking.

A booming market 

FinTech is a portmanteau that combines the words Finance and Technology. It refers to all the startups working to facilitate financial and banking procedures by harnessing the power of new technologies.

All around the world, FinTechs are experiencing spectacular growth. Between 2014 and 2015, investment in this sector has more than doubled (+210%) in Europe to reach 10.9 billion dollars. Their specialties include payments, insurance, fundraising, investment management, loans and deposits. 

It comes as no surprise that the United States, where FinTechs first emerged, dominates the market with 14.8 million dollars invested in 2015, despite only witnessing moderate growth (44%). But the sector is truly taking off in Asia with investment in Asian FinTechs ballooning by 400% in 2015 to reach 4.3 billion dollars, with virtually all investments coming from China and India. After a slight decline in 2016, investment in FinTechs continues to grow in both Europe and Africa. 

B2C, B2B or B2B2C? 

Behind the general FinTech term lies a wide range of different players. In fact, several different types of financial start-ups exist, characterized by their target. 

  • B2C (Business to Consumers) FinTechs serve end users. These include neobanks, 100% digital banks and banks with no physical branches; digital investment platforms; and apps for payment, personal finance management or wealth management. 
  • B2B (Business to Business) FinTechs offer solutions to companies including banks, such as factoring or dematerialized accounting, platforms for managing customer credit in SaaS (Software as a Service), etc.
  • B2B2C (Business to Business to Consumers) FinTechs represent all the crowdfunding platforms in a general sense. Their goal is to connect people with projects to institutional and individual investors. 
  • Finally, InsurTechs are FinTechs devoted to insurance. They notably offer comparison tools, smart contracts for faster compensation, etc. 

This article first appeared on the BNP Paribas Group website

 

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