Competing with traditional financial services (FS), top fintech startups evolved into mature organizations that are harnessing technology to improve banking, insurance, trading, and risk management. By using artificial intelligence (AI), robotic process automation (RPA), blockchain, and Big Data, the biggest fintech startups managed to disrupt the power of incumbent financial organizations. The rapid revolution of FS makes incumbents think of they should position their businesses to thrive.
Today, when lines between financial services and information technology have entirely blurred, the world of finance has rapidly begun to use tech innovations to reduce operational costs, enhance customer experience, and increase performance. Insurance companies exploit AI to better manage risks. Banks use Big Data to analyze consumer’s preferences and historical data to come up with a more personalized approach to banking products. People all over the globe are ready to discover more and more technological advancements as the latter can simplify payment-related and customer support procedures.
In this article, you will read about the current landscape of the fintech industry, learn about the top 10 fintech startups, and get some recommendations on what steps to take first to stay competitive and succeed.
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How Does the Landscape of FS Look Like Today?
According to the recent PWC Global Fintech Report 2019, the fintech industry features the following trends:
- Adopting fintech is becoming one of the top strategic priorities.
- Financial institutions should consult with technology providers on how to better implement fintech.
- Technology companies and financial firms should look at each other to bridge the skills gaps.
- Those who want to adopt fintech should search for the providers with relevant expertise.
To sum these findings up, we can say that adopting fintech is inevitable in a highly-competitive environment. Incumbents should look for experts in fintech not to spend their time for nothing and not to miss opportunities. Those who are stuck in the development for a long time risk to lag behind their competitors. Both financial organizations and technology business should look at each other to explore new ways of collaboration.
Innovative technology has become a good and low-cost solution for building conversational and intuitive platforms and fintech apps. However, financial services and technology providers have different opinions on what technology will be the defining one in their struggle for digital transformation. FS executives vote for artificial intelligence while technology practitioners believe that the Internet of Things will be more prominent. For example, AI-powered solutions are good at speeding up the processing payments time whereas sensors can be used to monitor patient health and analyze this data in underwriting. Here are the results of the PWC survey:
As you can see, about 52% of respondents from traditional banking think that IoT could bring maximum benefits to their business while the majority of fintechs consider artificial intelligence to be their top priority. And what do you think of that? What technology does your company need to gain a competitive edge? Are you already adopting some?
If you are about to implement new technology, we are here to help you. Fintech for banking and insurance.
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Who Is One Step Forward? Best Fintech Startups
Is it true that fintech startups are disruptors and not simply distractions? That is the question risen in Forbes; below are the main effects of the fintech evolution:
- Startups are not disrupters but they definitely motivate incumbents to embrace the change.
- Fintech companies are likely to poach some percentage of banks’ customers.
- Fintech startups changed the landscape of FS by delivering individual offerings at lower costs and better service.
- Incumbents understand that they need to use software outsourcing models to implement new technologies fast and effectively.
- Financial organizations are looking not for banking specialists but for technology experts skilled in machine learning, data analysis, and distributed ledger.
All these implications motivate financial institutions to change. According to Forbes, the first wave of disruption in FS lasted from 2012 till 2018, the next will go within the 2019-2025 period. They predict that the third wave will start in 2026, with a new industry emerging. So, let’s see what we have today – what top fintech startups introduced to the world and if their products are a true innovation.
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Top 10 Fintech Startups in 2020 (The Forbes Fintech 50)
According to Accenture, businessmen have invested over $53 bn. into fintech startups globally in 2019. These startups come under different categories like the following:
- Personal Finance
- Blockchain & Bitcoin
- Real Estate
- Wall Street & Enterprise
- B2B Lending
Ten Top Fintech Startups
So, let’s review some of the 50 best finance startups to see what’s interesting about them.
- Acorns (Personal Finance) is a round-up app that saves extra money from credit/debit cards into the investment portfolio. Other capabilities include individual retirement account (IRA), debit cards, investments from paychecks. The startup is being funded by Paypal, BlackRock, NBCUniversal, and is now worth 860 million dollars. It is used by over 6.8 million people.
- Coinbase (Blockchain & Bitcoin) appeared first as a cryptocurrency exchange, recently matured to offer custodial services, personal wallets, and new currencies. Funded by Tiger Global Management, Andreessen Horowitz, Union Square Ventures, now Coinbase is worth 8.1 bn. dollars.
- Ethos (Insurance) leverages predictive analytics to calculate life insurance rates just in 10 min. The application verifies the user’s self-reported information with electronic healthcare records so that the insurance policy is available to buy without a prior medical examination. The policies that are sold in the app are specially designed and feature premiums for 10-30 years and reach the coverage of up to 1.5 million dollars.
- Kabbage (B2B Lending) is an automated system that offers credit up to 200,000 dollars in just a few minutes. In 2019, it also started to serve payments for small businesses. Now, firms can manage their accounts receivable and invoices, as well. SoftBank Vision, Mohr Davidow Ventures, BlueRun Ventures invested in this startup. The latest evaluation equals 1.2 bn. dollars.
- Payoneer (Payments) is a well-known FS provider that allows such marketplaces like Airbnb, Amazon, Wallmart, and others to accept payments in foreign currency. Recently, it also started to provide lending to Wallmart and Amazon sellers. Funded by TCV, Viola Ventures, Susquehanna Growth Equity, the startup is worth 1 bn. dollars.
- Stripe (Payments) is one of the fastest-growing fintech companies. Founded in 2010, it now comprises 2000 employees. Fintech Stripe is a platform that accepts online payments from customers of small websites as well as of such giants as Facebook and Amazon. Recently, it introduced a new corporate credit card. Funded by Sequoia Capital, Visa, and General Catalyst, it is now worth 35 bn. dollars.
- Unison (Real Estate) is an online platform that offers homeowners and buyers to some of their furniture in exchange for a 10-percent down payment. The startup was funded by Citi Ventures, The Royal Bank of Canada, F-Prime Capital Partners, and others.
- Insurify (Insurance) is a big fintech startup that has been selling auto insurance since 2016. Today, it also offers life and home insurance. The system harnesses artificial intelligence to sell policies without involving agents. Personal data is protected and guaranteed not to be disclosed to third-party. Funded by Hearst Ventures, MassMutual Ventures, MTech Capital, and others.
- TransferWise (Payments) is a low-cost payment processing system that takes 0.7% for its services. Recently it introduced a new debit card that allows fee-free ATM withdrawals and purchases all over the world. The startup is being funded by Andreessen Horowitz, Sir Richard Branson, and is now worth 3.5 bn.
- Ripple (Blockchain & Bitcoin) provides international payment capabilities with a self-created cryptocurrency for 300 customers. This online platform ensures low-cost, instant, and easy money transfers all over the globe. Funded by Accenture, Google Ventures, Andreessen Horowitz, it is now worth 10 bn.
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What Opportunities Are You Missing Right Now?
It’s not critical how resistant your business is to disruption, it will be either way affected by global fintech trends. What’s important – prepare to embrace the change when that becomes an issue for your niche. What you can start doing right now is acquiring professional IT consulting services to find out what opportunities you can seize right now.
Diceus provides expert consulting on fintech for various domains including banking, insurance, government. We will help you determine the areas in which the latest technologies can be applied. Our analysts will conduct in-depth research of your business and come up with the list of real benefits fintech can bring.