Fintech – additional information
Fintech, short for Financial Technology, has been growing over the past few years. Fintech companies tend to find holes in traditional banking and fill them in with a new service. They challenge traditional banks by offering new services such as mobile payment, peer-to-peer lending, personal finance management and virtual currencies. Banks acknowledge existing threats in payments, simple savings products and accounts. Fintech is backed by large investments in spanning different areas of financial technology , going towards different companies. The largest investments in Fintech companies operating in the area of finance and banking in 2014 included CreditKarma and AvantCredi.
However, it appears that banks and Fintech companies are starting to work together. The most common reaction of banks is to startup programs which incubate Fintech companies, which means they are bringing Fintech companies in-house – 43 percent of banks did this in 2015. Another solution is to set up venture funds to fund Fintech companies and establish partnerships with them. Only ten percent of banks acquired their competition and only seven percent launched their own Fintech subsidiaries. It is interesting that banks are not jumping in to follow the innovation that is happening outside the company from within, but it seems they have found it easier to jump a train that is already leaving the station.