future of fintech Archives - CFTE

#Fintech50: 2014 Top Fintech 50 Startups Experienced Lower CEO Turnover Rate

cfteadmin — Fri, 19 Jul 2019 05:16:59 +0000

In 2014, KPMG together with AWI and FSC released the “50 Best Fintech Innovators” report, one of the first papers that examined the most prominent Fintech players globally. 5 years on, CFTE is taking an in-depth look at the evolution of these 50 companies.

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Since 2014, the top 50 Fintech startups as listed by a KPMG report recorded an annual CEO turnover rate of 9%. This is lower than the turnover rate of 11% for companies in the S&P 500, although slightly higher than the 7.94% expected of private firms in the United States of America.

In the five years since 2014, 19 out of the 50 startups went through a CEO change while independent (ie. before any acquisition deals). It can be argued that the higher rate of CEO turnover among the S&P 500 is down to the fact that more of these firms are public and have lower growth rates when compared to the Fintech startups, with growth being negatively correlated with a change in leadership.

This may now change among the Fintech 50 as four of them have since gone public, with two already public to begin with at the time of the report’s publication. In addition, the turnover rate of leadership has increased since studies determining this exact statistic were first conducted.

However, despite startups having a reputation for high turnover rates, the Fintechs listed have displayed impressive consistency with regard to changes among their management positions. How have they done this?

The details and more will be available in the Fintech 50: Back to the Future Report available on July 22. Sign up here to automatically get it, for free, upon release.

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The “Fintech 50: 5 Years in Fintech” report by CFTE presents their milestones, investment deals, growth and talent trends. We examine their hiring, survival rate, changing business models, success against incumbents, and expansion both geographically and in terms of market share.

About CFTE

We are a platform supported by senior leaders from the largest institutions, startups, and universities. We address the needs of professionals in finance to upskill in a rapidly changing industry being transformed by emerging technologies. More than 50,000 participants learn from our online courses, such as AI in Finance, Fintech Foundation or Extrapreneurship, a mini-MBA with fast-growing startups such as Revolut or Shift Technology.

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#Fintech50: B2B Startups in 2014 Top 50 Fintech List Now Reach Over 4 Million Businesses

cfteadmin — Wed, 17 Jul 2019 10:08:31 +0000

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17 startups in the 2014 KPMG report can be categorised as B2B players, and like their B2C counterparts, they have also rapidly grown since the release of the report, reaching a total of 4.4 million businesses today. The forerunner is the accounting firm Xero, boasting a client base of 1.8 million businesses, followed by payments companies SumUp and Stripe, with both numbering at least 1 million clients.

The 11 Fintechs that do provide information on their database have on average 396,000 business clients. Out of all the B2B startups in the list, it is highly likely that Square has the largest clientele, but it has not made public any business client data growth since disclosing that it was serving 2 million businesses back in 2016. If we assume that the company has maintained slight growth year-on-year, it is highly possible that it remains the leader in the pack.

So how have these companies maintained steady and healthy growth since the release of the report?

The details and more will be available in the Fintech 50: Back to the Future Report available on July 22. Sign up here to automatically get it, for free, upon release.

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#Fintech50: B2C Startups in Top 50 Fintech List Now Reach Over 315 Million Clients

cfteadmin — Tue, 16 Jul 2019 06:53:20 +0000

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Of the 50 Fintechs listed in the 2014 KPMG report, 33 can be considered to be part of the B2C segment, with their client base today numbering a whopping 315 million! This is a sum that is greater than the 306 million clients serviced by City, Bank of America and HSBC combined, and almost equivalent to the entire population of the United States of America!

Out of the 33 companies, 29 provide publicly accessible data – with an average of 10.87 million clients served by each. Crowdfunding platforms were also categorised as B2C firms in our #Fintech50 report, with investors considered as clients. The average figure is just below the 11 million served by Canadian Imperial Bank of Commerce, and just over the 10.76 million brokerage account serviced by Charles Schwab.

This growth can be largely attributed to the success of several companies, namely WeCash (130 million users), Credit Karma (85 million users), M-Pesa (33.4 million users) and Coinbase (25 million users). Is the ease of service provided by these firms in their respective segments a key factor in the rapid scaling of their customer base?

The details and more will be available in the Fintech 50: Back to the Future Report available on July 22. Sign up here to automatically get it, for free, upon release.

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#Fintech50: Most Successful Fintechs Focus on Acquiring Clients and Data First

cfteadmin — Fri, 12 Jul 2019 08:40:16 +0000

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The five most successful Fintech startups in the 2014 KPMG report, namely Square, Stripe, Coinbase Robinhood and Credit Karma, are collectively valued at a staggering US$71 billion today. This can be attributed to their focus in acquiring customers as cheaply as possible, allowing them to steadily build up a database of hyper-focused and -segmented users. Although their initial business was built on low margins, the curation of such relevant customer data allowed them to expand into higher-margin operations.

In the case of Credit Karma and Robinhood, they advertised free credit checks and trading respectively, allowing them to obtain millions of customers rapidly. Today, Credit Karma boasts 85 million users, allowing them to sell this data for potential borrowers while Robinhood has six million, which now gives them leverage to rebundle their product offerings, making it more profitable to themselves. In addition, Robinhood now offers premium services for a fee to users, while Credit Karma has branched into offering mortgages and other borrowing opportunities to consumers.

The most valuable startup of the five, Square, currently has 15 million monthly users on its cash app alone, with a further two million businesses onboard. Beginning as a business payments service, Square now uses its customer data to determine if clients qualify for financing. Launched in 2014, its lending program Square Capital has recorded impressive growth of 50% year-on-year, lending more than US$500 million in Q1 of 2019 alone!

This strategy of offering a better or cheaper version of an existing service, before expanding or branching out into other financial services is known as rebundling, which you can learn more about in our Fintech course.

The details and more will be available in the Fintech 50: Back to the Future Report available on July 22. Sign up here to automatically get it, for free, upon release.

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#Fintech50: 2014 Top 50 Fintechs Employ Over 27,000 People Today

cfteadmin — Wed, 10 Jul 2019 08:47:32 +0000

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A good yardstick for measuring growth for a company is the number of employees that it has. Today, the top 50 Fintechs as listed by KPMG back in 2014 employ more than 27,000 people – a total that is equivalent to 81% of the entire financial service workforce in the city of Bristol, and 74% the size of renowned investment bank Goldman Sachs!

Collectively, the group of 50 Fintechs added at least 8,061 jobs in the past two years (for firms that data was available for), which marks an impressive growth of around 43%. The average startup in the report boasts a workforce of 558 employees, highlighting the growth pattern of not only these companies, but the viability and sustainability of the global Fintech ecosystem as a whole.

So why have these companies successfully grown to the point where their employee numbers have increased exponentially year-on-year?

The details and more will be available in the Fintech 50: Back to the Future Report available on July 22. Sign up here to automatically get it, for free, upon release.

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#Fintech50: 5 of 2014’s Top 50 Fintechs Acquired For Over US$1 Billion Combined

cfteadmin — Tue, 09 Jul 2019 03:54:49 +0000

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Whether you have heard of the companies Future Advisor, Borro, LearnBest, Yodlee and Metamako, or not, they pack a serious punch in the world of Fintech. These five firms listed in the KPMG top 50 Fintech list were acquired at various stages after the publication of the report in 2014, for a collective total of more than US$1 billion.

Of the five, only Metamako’s valuation at acquisition was undisclosed, with the valuation of the rest averaging US$270 between them. This is an exit rate that is comparable to industry expectations, but their valuations at acquisition are not.

Using historic exit rates by funding round for US tech firms, it is expected that out of approximately 50 startups selected at random, there would be about ten exits instead of eight (including acquisitions). However, it is also pertinent to note that the valuation of these were much higher compared to the average tech exit.

Around 1% of US tech startups exit with a valuation of US$500 million or more, while five of the Fintech top 50 already exited at this valuation, which is an exponential increase on the expected rate. Is the growing awareness of Fintech a factor in this?

The details and more will be available in the Fintech 50: Back to the Future Report available on July 22. Sign up here to automatically get it, for free, upon release.

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#Fintech50: 4 of 2014’s Top 50 Fintechs That Went Public Now Have a Combined Market Cap of US$32.6 Billion

cfteadmin — Fri, 05 Jul 2019 09:40:13 +0000

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Since December 2014, the top 50 Fintech firms as listed by KPMG have not kept up with the general funding pattern of the industry. This is largely down to their success as Fintech startups, meaning they did not need to raise more equity funding from venture capitalists. Four out of the 50 have had IPOs since, with Xero having an IPO as far back as 2007 .

The four firms with IPOs, Funding Circle, Square, Lending Club and OnDeck, have a combined market cap for US$32.6 billion, which boils down to over US$6.5 billion per company on average. However, it is important to note that the US$30 billion valuation of Square substantially raised the overall average, which would have been US$599.65 million without it.

Three of the four are SME lenders, with two of them being peer-to-peer platforms. However, all three of these startups have since experienced a rocky road post-IPO, with their market capitalisations dropping since going public. Square, the payment firm, has been the most successful, with a current valuation of 10x its IPO. But how and why has it performed much better than its counterparts?

The details and more will be available in the Fintech 50: Back to the Future Report available on July 22. Sign up here to automatically get it, for free, upon release.

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#Fintech50: 2014 Top 50 Fintech Startups Received US$9.6 Billion in Equity Funding

cfteadmin — Wed, 03 Jul 2019 09:28:27 +0000

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The 50 firms highlighted by KPMG in its “50 Best Fintech Innovators” report back in 2014 were certainly industry shakers. Collectively, the group raised a total of US$3.5 billion in funding up through 2014.

In a good sign for the group, their collective funding rose US$6.1 billion since 2014 (to US$9.6 billion overall), marking an increase of 170% since the report was released. This indicates growth and success for these firms, no doubt thanks to the greater awareness of Fintech around the world today.

However, what is interesting is that it is only a small fraction of what the Fintech industry has raised. From 2014 to 2018, private equity, venture capital and various mergers and acquisitions have contributed US$338.5 billion to Fintech firms, with funding averaging 36% in growth year-on-year.

Have these firms been left behind or is the world simply catching on to the benefits and advantages of Fintech?

The details and more will be available in the Fintech 50: Back to the Future Report available on July 22. Sign up here to automatically get it, for free, upon release.

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Fintech Startups Don’t Die

cfteadmin — Mon, 24 Jun 2019 18:15:20 +0000

CFTE’s analysis of 2014 fintech startups finds they are remarkably resilient. Its Fintech 50: Back to the Future examination of the top 50 fintechs of 2014 finds only 4% failed, surpassing tech industry expectations in every funding round.
Only 2 of the 50 went bankrupt. One, Receivables Exchange ceased operations in 2016 while facing arbitration claims. Payday lender Wonga went bankrupt in 2018, after the FCA tightened lending rules in 2013 and Wonga received a flurry of compensation claims for early loans. Both were series C firms.

We would have expected 17, rather than 2, to fail if they were standard US startups. The selected fintech firms were, on average, 4.7 years old in 2014, and 34% of US startups that survive 5 years don’t survive another 5, according to the US Small Business Administration.

The details and more will be available in the Fintech 50: Back to the Future Report available on July 22. Sign up here to automatically get it, for free, upon release.

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Extrapreneurship – The Future of Entrepreneurship in Fintech

cfteadmin — Mon, 24 Jun 2019 07:36:01 +0000

Extrapreneurship is a term that is still fairly new, but then again it is a relatively recent school of thought. The idea that an employee can spearhead new initiatives through experiential learning is one that is fast gaining traction. Many employees of big tech firms and financial institutions are now looking up further education modules such as entrepreneur classes, Fintech MBA programmes and similar types of learning platforms. Which brings us to the question – can you learn entrepreneurship? We believe so.

The framework known as experiential learning helps participants to develop an entrepreneurial mindset and a way of thinking that prioritises positive initiatives and discovery of new ways of operating. This is best demonstrated by the trend of many financial institutions and established multinational companies having dedicated innovation teams, in which an entire department is responsible for championing changes for the better.

With the fast-paced nature of Fintech today, it is important for companies to allow extrapreneurs in their midst the flexibility to make mistakes. The lessons and data learnt from these experiments help them to quickly adjust and pivot in order to make positive changes that will benefit their company in the long run. It is a key reason why many BigTech firms around the world have successfully managed to quickly establish a Fintech arm, with data being key to their efforts.

Furthermore, the practice of extrapreneurship within financial institutions will allow for easier collaboration with Fintech startups. It is a win-win situation as it mitigates the risk posed to them as there is no need to start up a new department. This also provides them the technology needed to modernise and serve their user base better, while helping startups to scale simultaneously.

The Fintech ecosystem needs extrapreneurs, or individuals that have an entrepreneurial mindset to thrive. Will you be the next one?

Join our CFTE Extrapreneurship Programme which has been created to respond to this need. The programme allows professionals to experience entrepreneurship by working on a strategic issue of high growth startups, with Revolut and Shift Technology being part of our previous programme. Applications are currently open.

Click here to read more of our leading new Extrapreneurship programme!

CFTE is the learning and innovation platform for individuals and organisations to act on the transformation of Finance. Learn how to get into Fintech, explore the exciting opportunities at Fintech startups, lead AI projects and develop your career.

CFTE develops leading online courses (Comparable to Harvard Fintech Course, Oxford Fintech programme and MIT Fintech certificate course), Experiential Learning Programmes such as Entrepreneur workshops and also animate a community of 1000 of alumni and experts.

Start with the foundations with our Fintech Foundations Programme and AI in Finance course.

Think and act like an Entrepreneur with our Extrapreneurship Programme.

Meet and get inspired at our Fintech ecosystem

Browse our Fintech Events Agenda.

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