Innovation Quarterly: Latest in Fintech Innovation Q4 2016

Celent has released a new report titled Innovation Quarterly: Latest in Fintech Innovation Q4 2016. The report was written by Stephen Greer, an analyst with Celent’s Banking practice.

In 2010, total investment in financial services technology was less than $2 billion. Since then it has skyrocketed, reaching more than $12 billion in 2014 and $22 billion in 2015, according to Accenture. Nowhere is the growth of fintech more evident than industry conferences like Swift’s Innotribe and Finovate. These events are the testing grounds for innovative creations, growing each year to reflect the interest in the space.

Emerging technology startups — fintechs — in financial services are mostly small, with limited market exposure, but are innovating on specific processes and lines of business. Only recently has the industry finally begun to embrace the new market entrants. Skepticism, driven partly by the fear of cannibalization and apprehension about drastic transformation, is beginning to subside as institutions start to see the value of engaging these companies as vendor partners rather than adversaries. Venture capital dollars have shifted toward startups that position themselves as industry collaborators rather than disruptors.

In 2010, according to Accenture, more than 60% of investments in North America were in “disruptive” Fintech startups, and only 40% went to those positioned as “collaborative.” In 2015, that flipped to 40% disruptive, 60% collaborative. For the majority, becoming the Uber of banking is no longer the end game. Banks are increasingly seeing the value these companies can offer and are more ready to engage. Venture capital dollars have shifted toward startups that position themselves as industry collaborators rather than disruptors. In 2010, according to Accenture, more than 60% of investments in North America were in “disruptive” fintech startups, and only 40% went to those positioned as “collaborative.” In 2015, that flipped to 40% disruptive, 60% collaborative. For the majority, becoming the Uber of banking is no longer the end game. Banks are increasingly seeing the value these companies can offer, and are more ready to engage.

“Fintech startups are changing the nature of banking. New innovators are setting the trends, often raising the bar for what ‘good’ looks like,” Greer said. “Investors are jumping at the opportunity to fund these ventures, excited by the immense potential.”