What Is The Fintech Opportunity?
The financial technology (Fintech) industry, in its simplest definition, is an emerging evolution of companies that want to want to change the banking experience and the financial industry through innovations and technology. In the process, they hope to make the financial sector more accessible, less expensive, and simpler.
Fintech trends are categorized by various market functions that are beginning to experience transformation, and in some cases, a major disruption. The largest segments are: (i) Capital Markets/Technology; (ii) Payments; (iii) Data Analytics; (iv) Banking & Corporate Finance and (v) Personal Finance.
Due to the fact that these new financial systems and technologies will lead in the “disaggregation” of the global banking industry, investment flow has gone from $3Bn in 2012 to $12Bn+ in 2015.
At the same time, global stock markets have also grown at a relatively more modest pace of 35% from US$49tn in 2000 to US$66tn in 2013, partly driven by economic growth in emerging markets, better prospects for economic recovery in developed markets and an increase in initial public offerings (IPOs).”
When including the market for securitized products, the number climbs from $156 trillion to around $200 trillion. And this doesn’t even consider the over-the-counter derivatives market, whose notional value is estimated at around $693 trillion.
Incorporated specifically within our “hybrid” PE model, potential acquisition sources for our portfolio components are a myriad of international banks that have begun to positively view innovative IP; service provider functions and operational standards that will evolve over the next 2-5 years, as being integral to their full-scope of services.
Compliance issues related to the forthcoming 2017 MiFID II enactment in the EU and the projected 2020 U.S. banking industry transformation will hasten that process.