It’s easy to assume that blockchain and cryptocurrencies like bitcoin dominate the fintech sector and–while that may be true–there’s more to the industry than just digital currencies.
Over time, fintech has evolved to reshape the banking industry and how people manage their money. In that regard, fintech companies offer solutions and disruptive technologies such as mobile payments, big data and–yes–cryptocurrencies–as alternative methods of finance–and 2017 was indeed a transformative year for the industry.
Here, the Investing News Network (INN) takes a look back on the year and some of the biggest trends, including commentary from some exciting companies in the space. Continue reading below for more on fintech trends 2017.
Fintech trends 2017: VC deals and the global emergence of fintech
Indeed, 2017 was a big year for the fintech industry in a number of ways–Q3, for example, saw an increase in venture capital-backed companies raising $4 billion across 278 deals, according to a CB Insights report. As such, the report indicates that with so much growth in Q3, “funding deals and dollars could top new highs in 2017″ at the pace it’s going.
Case in point, a PwC global fintech report for 2017 indicates that funding for fintech startups has increased at a compound annual growth rate (CAGR) of 41 percent over the last four years, crossing over the $40 billion in cumulative investment.”
In terms of the overall growth of the industry, corresponding venture capital and corporate investments in the market has garnered a wide range of attention. According to an EY Fintech Adoption Index 2017, called “The rapid emergence of FinTech,” fintech firms are in a good position for mainstream adoption in a number countries, with China leading the way at 69 percent adoption rate. India follows behind at 52 percent, then the UK at 42 percent, Brazil at 40 percent and Australia at 37 percent.
Somewhat behind is the US, at 33 percent, and then Canada, at 18 percent adoption rates. That said, however, since 2015 fintech adoption rates in Canada has more than doubled, increasing from 8 percent then to 18 percent in 2017.
According to EY, the countries with the biggest growth of consumers adopting fintech between 2015 and 2017 are the UK and Australia.
Fintech trends 2017: Financial institutions adapt
A PwC report indicates that most global financial service companies will increase their partnerships with fintech companies because 88 percent “express concern” about losing revenue to innovators.
That said, while consumer banking will continue being disrupted by fintech, many financial institutions have taken it as an opportunity to implement fintech into its services.
The PwC report states that bankers are “increasingly turning to fintech companies” to engage in partnerships–54 percent of PwC respondents have done so compared to 42 percent the year prior–to buy the services of fintech companies–40 percent in 2017 versus just 25 percent the same time period the year prior.
“Banks are focusing on the improvement of their operations through digital solutions and are looking to increase customer empowerment and/or control of financial matters,” the report reads. “Banks are also exploring new technologies, such as blockchain, with nearly one-third of respondents stating that they are in the early stages of evaluating their strategy and potential partnerships.”
PwC’s Global Fintech Report 2017 also highlights that financial institutions are partnering up with fintech companies in order to bring new innovations to the industry. Case in point, n a global scale, partnering with fintech companies is up 32 percent in 2016 to 45 percent in 2017. In all countries, most participants–with an 82 percent average–anticipate increasing partnerships with fintech companies over the next three-to-five years.
Fintech trends 2017: Companies in focus
With the rise of VC deals, global emergence of fintech and financial institutions realising the benefits of fintech and–of course, the ever growing popularity of blockchain and cryptocurrencies–companies in the space have only just begun to reap the benefits.
Glance Technologies (CSE:GET; OTCQB:GLNNF), for example officially went public in September 2016 and has certainly made a name for itself in such a short amount of time, relatively speaking. The company’s Glance Pay app offers mobile payments in restaurants. Through the app, its customers can pay their restaurant bills, access records, receipts, awards and even rate restaurants.
Penny Green, COO and co-founder of Glance Technologies told INN that coming into 2017, the company was experiencing a lot of growth just a few months after going public, and was hoping to “continue the rapid adoption” of its payment platform throughout the year.
“We were lucky to be able to enter some new verticals, which was something we hadn’t really thought about at the end of 2016,” Green said when asked about whether or not the company had met or exceeded its expectations for the year. Green added that Glance entered the cannabis space through a licensed joint venture agreement.
“We set up CannaPay Financial and we licensed all of our technology for use internationally in the cannabis industry,” she said.
The trend didn’t stop there: Green said Glance Technologies also did it with a company called Active Pay Distribution, which owns a clothing line called Brazilian Spot, and then did the same with Euro Asia Pay, a company that intends to build an app that services the international student population in North America.
Entering the cryptocurrency and blockchain space was also a no-brainer for the company.
“We started by entering into an agreement with NetCoin, who provides a digital ATM for merchants to allow them to sell bitcoin,” Green explained. With the addition of adding advisors to its advisory board knowledgable in the blockchain and cryptocurrency space, Green said the company thought it would be a “great opportunity” to add its own cryptocurrency built on the etherum platform “and use smart contracts to provide rewards, which will be purchases in conjunction with our mobile app.”
MOBI724 Global Solutions (CSE:MOS) is another fintech company that had a transformative 2017. Marcel Vienneau, the company’s CEO told INN that some of its key highlights include integrating the company’s Mobi724 platform with Visa Offers platform and the beginning of the co-marketing commercial rollout with Visa in Q4 of this year.
“My objective for this year was to set the stage for high growth moving forward and I am very happy with the achievements of our team this past year,” he said.
Mobi724’s payment platform also received certification in the Philippines, although Vienneau said the company’s biggest milestone was its partnership with Visa to co-develop the Latin American and Caribbean markets.
“To have the confidence of a global company like Visa at this stage of development is a boost of confidence,” Vienneau said. “I believe it solidified the confidence of our shareholders in our business plans moving forward.”
Fintech trends 2017: Investor takeaway
In conclusion, the growth of the fintech industry on a global scale and with financial institutions is more than promising for the industry moving forward. As most companies in the space are relatively new, investor interest in the space has been somewhat slow, although that’s certainly poised to change.
Investors may require some patience in the short term, but with 2018 looming, excitement is bubbling in the fintech space, which should provide some level of comfort as it relates to investment opportunities in the years to come.
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Securities Disclosure: I, Jocelyn Aspa, hold no direct investment interest in any company mentioned in this article.