2018-03-08 Pierre-Yves Lanneau Saint Leger

Focusing fintech: identifying industry-changing innovations

“Silicon Valley is coming. There are hundreds of start-ups with a lot of brains and money working on various alternatives to traditional banking.”
Jamie Dimon, CEO J.P. Morgan

It’s been almost three years since J.P. Morgan’s CEO made that prophetic comment. Around the same time, VitalBriefing launched its weekly Global Fintech Briefing to track the trends and innovations driving the growth of a financial technology industry that has since ballooned from hundreds of hot start-ups to thousands.

Yet, it’s a minefield out there. From bankers trying to follow the latest trends to investors hunting for the next opportunity, anyone interested in following the evolution of fintech today is obliged to navigate an increasingly crowded, muddied and fast-changing landscape.

Between the Wild West of virtual currencies where almost anyone with a PC can launch an ICO to the walls and moats being reinforced by established financial institutions and nervous regulators, lies a diverse and dynamic world of technology merging with finance in new and often unexpected ways.

Payments – in stores and between friends – are now instant and contactless from a smartphone. The same technology is enabling the under-banked to gain access to diverse financial services, in the process creating millions of online consumers across emerging and developed markets. Peer-to-peer lending, crowdfunding and low-cost remittance services are similarly making banks less relevant for a new generation of consumers around the world.

Crypto-currencies have created crypto-millionaires – and possibly fuelled the biggest investment bubble in history – even as businesses across the financial industry and beyond continue to dig in search of blockchain technology’s killer app. And, on the horizon, robots imbued with rapidly advancing artificial intelligence are charging over the hills with the potential to eliminate hundreds of thousands of jobs in banking and beyond.

The rapid evolution of the fintech industry has been advanced by massive amounts of funding – $31 billion last year alone – though there are signs global investors are no longer just getting their feet wet but, rather, trying to make more targeted investments focused on long-term sustainability.

And therein lies the rub.

If history is a guide, then investors might do well to cast their minds back to the last period of significant technological disruption. Many startups that emerged during the dotcom boom have landed in the dust heap of investment-bubble history.

Much has changed since then – smartphones are ubiquitous, millennials are more inclined to embrace technology than previous generations and cloud computing can scale businesses in minutes – but the laws of the market remain the same: only a handful of emerging financial technologies will have a meaningful impact on the future of finance, and even fewer of today’s start-ups will be around to see it.

By filtering the hype and noise today, VitalBriefing is identifying the innovations and innovators that will change the world of finance tomorrow.