CFTE Fintech 50 – 5 Years in Fintech: What are the Key Takeaways?

CFTE Fintech 50 – 5 Years in Fintech: What are the Key Takeaways?

By Caleb Khew

Putting together our most ambitious project to date, the Fintech 50: 5 Years in Fintech report certainly shed plenty of light on the state of Fintech today. Having grown exponentially since 2014, the 50 companies on the initial list have enjoyed runaway success, collectively speaking, but the entire Fintech industry has exploded since then, with no signs of abating.

From compiling this mammoth document, there were many interesting highlights and points, but there are simply too many go into detail here. With that in mind, here are some of the key takeaways in the report we found fascinating:

The demand and potential of Fintech

Out of the 50 Fintechs listed from 2014, only two went bankrupt, four had an IPO and five were acquired. These are staggering statistics that highlight the necessity of Fintech in the finance industry, as normally it would be expected that 17 of the 50 firms would end up in bankruptcy. Such a low rate of failure is unheard of and demonstrates the potential of the Fintech industry to transform the way in which we live.

Further proof of this lies in the number of their collective success – out of the 50 companies, 12 are valued at over US$1 billion, with a collective total of US$6.1 billion in investment raised since 2014. Around 30,000 employees are now working for these firms, highlighting how they have not just disrupted the finance industry, but have also created plenty of job opportunities.

What people want

Among the 50 Fintech firms, most of them operated in the financial verticals of crowdfunding, do-it-yourself wealth management, payments/money transfers, and balance sheet lending. Traditionally, these financial services have not been open to all members of society, with banks and financial advisors often offering such services to clientele of a certain net worth.

The success of these companies demonstrates how these services are very much in demand by large sectors of society, and their rapid growth since 2014 only serves to underline this point. In the case of payments/money transfers, they offer huge improvements over existing services such as instant transfers, lower fees and ease of use, which explains why they are in demand.

A common factor of success for several of the Fintech 50 was by acquiring users rapidly, with many focusing on underserved markets as highlighted above. In this way, they quickly gained mass market appeal – for example, free credit reports, easy to use accounting software and cheaper stock trading to name a few. Once users were acquired, many focused on retaining and monetising them through premium products or tailored services for their needs. With only 2 of the Fintech 50 going bankrupt, it is safe to say that their methods have been nothing short of a runaway success!

The rise of emerging markets

Of the 50 firms in the 2014 list, 26 of them were American, with California alone better represented than any other country, thanks to the hubs of San Francisco and Silicon Valley. Only three firms were based in emerging markets, with the list mainly consisting of companies in the US, UK and Australia (80%). While the list certainly shows that the western hemisphere were the early adopters of Fintech, emerging markets such as China and India are catching up fast.

Back in 2014, the concept of emerging markets was not even considered, whereas today it seems clear that these markets should not be ignored. When considering today’s most valuable Fintechs, only four companies listed in the top 50 back in 2014 (Square, Stripe, Xero, Coinbase) make the top 10. Alibaba’s financial arm, Ant Financial, and Lu.com occupy the top two spots, with JD Finance coming in fifth, just behind Stripe.

PayTM (India) and Grab (Southeast Asia) are the other companies that round up the presence of firms targeting emerging markets in the top 10, with the cryptocurrency Ripple being the only new entrant from a developed nation. Outside the top 10, Brazil’s Nubank sits in 15th spot, with a value of US$4 billion. Perhaps the most staggering statistic is Ant Financial being valued at US$150 billion, making it one of the world’s top 10 banks by market capitalisation and worth almost four times as much as Lu.com (US$39 billion), highlighting just how much potential there is in the emerging market of China alone!

If you have not had a chance to read through our full report, click here to download a free copy!

Caleb Khew. Caleb graduated from Monash University and has worked at various startups throughout his career, most notably Groupon. Currently, he acts as the Marketing Manager for SuperCharger, the leading FinTech accelerator in Asia, as well as he is a CFTE’s lead writer.

LinkedIn: linkedin.com/in/caleb-khew

Twitter: @Cfte_edu

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