Fintech venture capital firm, Life.SREDA, has issued its 2014 Fintech Annual Report. The data covers numerous sectors of the financial technology industry and includes their Top 10 Trends from 2014 and predictions for 2015. Headquarted in Moscow, Life.SREDA focuses on mobile and online fintech startups with notable investments in Fidor Bank and Simple.
Top 10 Fintech Achievements and Trends of 2014
1) Fintech investments tripled in 2014: Headed by pouring venture capital money into the sector, investments in fintech firms tripled to $6.8 billion in 2014 compared to $2.2 billion in the previous year.
2) Fintech IPOs: Venture investments are only worth it when they can be followed by Liquidity events. The fintech sector had two such large cases as LendingClub and OnDeck having successful IPOs
3) Billionaire’s Club: From three fintech startups of LendingClub, Square and Stripe being valued at over $1 billion in 2013, seven more firms joined their ranks as TransferWise, Kreditech, CreditKarmae, Wonga, Powa, SoFi and Raise hitting the milestone.
4) Apple goes fintech with launch of Apple Pay: Life.SREDA views Apple Pay as less technologically innovative, but important as the large brand and customer base will create financial innovation from their users.
5) Payments via messaging: From Facebook to WeChat, numerous messaging providers are working on or have launched payment integrations within their messaging offerings. The products look to create networks where sending money is as easy as sending a WhatsApp message.
6)Rocket Internet IPO : For those unfamiliar with the startup incubator Rocket Internet, this Wired article gives an inside look why they are successful and controversial. Life.SREDA believes that their IPO last year will usher a wave of increasing their exposure in fintech after Rocket Internet’s founders confirmed that fintech is “the next big thing."
7)PayPal and eBay separate: An early fintech firm, PayPal is freer to focus on payment innovation without their connection with eBay and eCommerce.
8) China fintech emerging: “Only a matter of time and not if” is Life.SREDA’s view of fintech and China. With AliPay set to go public and China-backed VCs reportedly ready to put billions in the sector, fintech innovation from China is ready to take off.
9) Mobile banks finding buyers: Part of Life.SREDA’s portfolio. Mobile bank American Simple was acquired by BBVA for $117 million. Life.SREDA views this deal as one that is triggering other traditional banks to look at their mobile counterparts and will lead to more acquisitions taking place.
10)mPOS is the fastest growing fintech sector: mPOS (mobile point of sales) companies like Square are the fastest growing fintech sector. Life.SREDA attributes this on the ease of it being understood by customers, such as small businesses.
2015 Predictions
1) What they call ‘Blurring of Boundaries’. This is a trend where Life.SREDA believes that category distinctions such as services aimed at small, medium, large and institutional and consumer will evaporate with fintech firms providing similar solutions for all their customers.
2) Move from services to eco-systems as products become more diversified in what they can do and offer to their customer bases. (Editors note: this trend also makes moats deeper and wider for incumbents, as startups will have to arrive with not only innovation but wider offerings)
3) Emergence of Asia's fintech companies with investments coming from US and European VC firms.
4) Boom of startups offering customer and internal analytics such as those providing SMEs with data analysis of accounting and invoicing.
5) P2P transfer services will continue to arrive to instant messaging platforms that have critical mass
6) Commercialization of offline mobile payment products such as those using QR codes and NFC
7) Furthering of mobile wallet-based products that can alert users of promoted products in their areas.
8) Retailers, both on and offline will become more important in driving future of point of sale devices.
9) Telecom companies such as wireless carriers will become more important in the fitnech industry, such as with their participation in the creation of mobile banking offerings.
10) Attitudes towards bitcoin and other cryptocurrencies to improve.
