The beginning of Fintech was 5 years ago. Of course, it’s not entirely true – we could argue that finance has always used technology, and Fintech is not new. Or that it was really the 2008 financial crisis that precipitated the rise of Fintech, from consumers eager for an alternative financial system.
But the years around 2014 were special, because that’s when the mainstream media started to notice the Fintech phenomenon, and some started to realise that something was happening in finance.
Traditional financial institutions took notice of new trends such as peer-to-peer lending or robo advisors, but were usually dismissive of their impact. Entrepreneurs saw the opportunity, which led to a very rapid rise in the number of Fintech startups, with San Francisco and London being the major hubs. In places like London, the ecosystem started to take shape, with Level 39 or Startupbootcamp leading the charge. Venture capitalists accompanied this development, by quadrupling the amount of investment in Fintech in 2014 – reaching $12 billion. And the speech from Martin Wheatley, Chief Executive of the FCA, about “Innovation: the regulatory opportunity” set the tone for regulators around the world to think of innovation in financial services.
5 years is a very short amount of time, which makes the findings of the “5 Years in Fintech” even more striking. 5 years ago, most consumers were unaware of Transferwise or Credit Karma, and many businesses would not have heard of Stripe or Square. Today, many in Europe use Transferwise, and 50% of American millennials use Credit Karma. Millions of businesses use Stripe or Square as their payment providers.
Our objective in writing this report was to understand how Fintech had transformed – or not – financial services, and to identify what we, as an industry, got right – or wrong – about the impact of Fintech.