In 2014, fintech investment in the United States nearly tripled. Consider these numbers: in 2013, the value of fintech investment in the US was $3.39 billion. Last year, those numbers soared to $9.89 billion. Over the next two weeks, I’ll share with you how fintech got to where it is today and I’ll look at what’s on the horizon for the booming sector.
Let’s level set: where are we today with fintech?
Financial service firms, the venture capital community, local governments and entrepreneurs are all signaling that fintech is becoming a major force in shaping markets. Financial services companies are waking up to the vast opportunities enabled by the current wave of fintech. They are embracing innovation like cloud technology, mobile wallets and blockchain to re-examine their business and operational models. We have moved far beyond the early days when the main focus was payments to a broader and richer set of capabilities.
What we’re seeing is that financial institutions are trying to determine how best to connect into the fintech ecosystem, whether by investing, creating an incubator or in some other way. Many institutions are now starting to realize the depth and complexity of fintech, and they want to do more. These firms are also recognizing the power of platforms and how important it is for financial institutions to control the platform but provide the ability to integrate third-party products.
Let’s look specifically at New York, where deal value grew by 32 percent from 2013 to a new high of $768 million in 2014.
Investors have shown particular interest in crypto currency and blockchain technology startups recently. In 2014, investments in the bitcoin sector surged to $349 million, up from $97 million the year before. Blockchain is a good example of how the financial services community is finding new uses for disruptive technologies. And, although the technology’s potential is only just emerging, distributed ledger technologies will become the critical backbone of future capital markets.
To keep up with the significant advances in digital technology, banks are forging closer ties with the fintech community, they’re partnering with fintech companies to find more efficient ways to power their businesses and more creative ways to serve their customer.
So, what’s next for fintech? Join me next week when I take a closer look at the next frontier of fintech.
Until then, to learn more, read: