Since the dawn of the 21st century, we as a collective society have seen a dramatic increase in the use of technology. Computers have gotten more intelligent, files are easily accessible almost 24 hours a day through cloud computing and our mobile phones and tablets are quite literally a part of our everyday lives. And while many people believe that technology is only being applied to consumer goods through the use of home electronics, automobiles and cellular devices, other industries are benefiting from technology in large ways.
One of the latest industries to benefit from this technological revolution is the world of finance. Originally referring to how technology could be applied to the back-end of traditional consumer and trade financial institutions, financial technology (fintech) has grown in the past few years. Now the term refers to any innovation in finance including financial literacy, crypto-currencies and investments. While the rapid growth of fintech is impressive, what does it mean to the world of finance and business in general?
Well, due to the world’s increasing reliance on technology, fintech is quickly becoming necessity for existing institutions to adapt. The days when a new business, or even an old one in some situations, would need to turn to a traditional bank or investor are over. Now, startups have the astounding power of the Internet at their disposal in order to get funding through crowdsourcing. Businesses of all sizes are also turning to mobile payment processing fintech companies for easier payment processing and quicker money transfers across state or continental borders in order to save time and headaches. It is innovations such as these that make fintech increasingly important to our contemporary business world. And investors are taking notice.
In a recent report from CNBC, KPMG (one of the world’s four largest auditing companies) states that over $20 billion of funding for fintech companies was raised last year alone. And with so many fintech startups out there (recent estimates are as high as more than 6,000 worldwide in 2015, which has certainly grown since then) it can be difficult to stand out from the competition. Here is a list, in no particular order, of fintech companies that are not only making a name for themselves, but changing the world of finance as we know it.
One of the more popular companies in recent years, Stripe is a digital payment processing company. Founded in 2011 by Irish immigrant brothers John and Patrick Collison, Stripe has grown exponentially, from having only 3.8% of Americans purchasing products through Stripe in 2014 to an impressive 27% this year. And with an estimated $20 billion in payment volume, Stripe’s actual revenue is roughly $450 million. The company also boasts an impressive list of clientele, most notably Kickstarter, Lyft and Shopify.
The company has much larger ambitions, with Co-Founder Patrick Collison stating in a Forbes article, “If anyone here believes that Stripe has already made it, that would be hugely problematic for us.” The company seeks to become the primary source for new forms of commerce. Although they face formidable competition from competitors, Stripe is confident that it can reach that goal shortly.
Founded in New Zealand in 2006, Xero offers online accounting software for small business owners. Although its user base may not be as large as other accounting software companies (over 800,000 users) it offers a much more comprehensive program. Some of the features include: invoicing, inventory, payroll, bank reconciliation, expense claims, file sharing and more. The service even allows business owners to track their profits over multiple currencies, and, to show its competitive nature, can convert their files from Quickbooks, quite possibly the most popular accounting software in the country.
The program also seems to have its eye on the future of technology, not only in the form of cloud storage and mobile compatibility, but in wearable technology as well. Xero recently released its Apple Watch application, allowing users to keep track of their cash flow on their wrists, with a sleek and intuitive design.
With an eagerness to compete with the major players, an adaptive strategy and exponential growth, Xero is poised to take over the accounting software market.
Formerly known as AliPay, Ant Financial is the world’s largest third-party payment platform. Through its AliPay service, Ant Financial serves over 50% of China’s online payments, with an estimated 450 million users. Comparable to PayPal, AliPay allows users a safe and easy form of payment for online purchases. The company also operates the money-market fund Yu’e Bao as well as the online bank MYbank. With services ranging from wealth management to cloud computing, Ant Financial has made a name for itself in the fintech industry.
One of the more unique companies in the list, Qudian is a student microloan site and instalment payment platform. Based in Beijing, the company has seen a great deal of success lately, with over $452 million in funding. Another entry on this list, Ant Financial, was one of the larger backers of the company, offering a whopping $200 million. This past June, Qudian surpassed the 10 million user landmark, which is impressive, given their strategy of directly marketing to students through the use of part-time marketers and strategic advertisements on campus. The company essentially allows for students even those without a credit history to take out a loan in order to make payments on just about anything, primarily focusing on extravagant personal gifts. Regardless of the marketing tactics used, the company seems to have the approval of some of the country’s largest venture capitalists.
Oscar Health Insurance
Co-founded by Josh Kushner in 2013, Oscar Health Insurance is an insurance provider looking to simplify the process of health insurance in the U.S. through the means of technology. By being more consumer friendly than traditional providers and offering a patient’s information in an easy-to -access format, Oscar seeks to flip the healthcare industry on its head. The company has done fairly well for itself, with Founders Fund, Horizon Ventures, Wellington Management Company and Goldman Sachs raising $145 million in new capital, bringing the company’s value to $1.5 billion. According to a report from Fortune, Oscar is one of the largest health insurance startups, with over 40,000 members under the company’s policies.
What is even more impressive is the grand opening of Oscar’s Brooklyn healthcare facility. On its first day open, all available appointments filled up almost immediately, showing a huge interest in the company. It is a great sign for a company that is changing the healthcare industry as we know it.
Known as a neobank, Atom Bank is an online-only banking system. In a recent report from Business Insider, CEO Mark Mullen stated, “Atom aims to offer a genuine alternative to the insidious and self-interested banks that dominate the UK banking landscape.” Essentially, users interact with the bank through their newly released iPhone and iPad application only. And although the company faces stiff competition in the form of other neobanks such as Mondo, Starling Bank and Tandem, it seems to be doing quite well for itself, raising more than $45 million in funding and being valued at over $150 million.
The company is set on utilizing technology to simplify the banking process for its clients. Running on a video game engine, the application uses face and voice biometrics in order to authenticate users, and uses AI and machine learning in order to create the most efficient customer service team possible. If the company can truly integrate this technology to make a seamless and simple banking experience that is free of headaches, then expect Atom Bank to become a household name.
The U.S. is plagued by student loan debt, and SoFi is aiming to help. A personal finance company, SoFi offers many desperately needed services and options that traditional banks do not, such as student loan refinancing, personal loans, mortgage loans, wealth management and even job search and career strategy assistance. The startup has even managed to land some very helpful screen time, having had a brief appearance on The Ellen Show. With over 200,000 customers and $13 billion in funded student loans, SoFi is certainly a company to keep your eye on.
Focused exclusively on small businesses, Funding Circle is quickly becoming the world’s foremost marketplace for investors. Across the world, Funding Circle has managed to lend over $2.5 billion to 20,000 businesses. The company allows other businesses to obtain funding directly from a large variety of investors. After being rejected time and time again for loans, Co-founders Samir Desai, Christian Grobe, Sam Hodges, James Meekings and Andrew Mullinger created Funding Circle with the hopes of disrupting the, as their website puts it, “outdated banking system”. Funding Circle is well on its way to achieving that goal, with over $300 million in equity capital from Accel Partners, BlackRock and Index Ventures (to name a few).
What makes Knip stand out amongst the dozens of insurance management companies is that it is one of the few that can only be used on mobile devices. The company’s mobile application, available on both iOS and Android devices, has been downloaded 330,000 times in Switzerland. Knip, a Swiss company, has earned $15.7 million in Series B funding from Route 66 Ventures, a U.S.-based firm. Essentially, the application acts as a mobile insurance broker, allowing users to view their insurance policies, tariffs and services. The application even analyzes your policy and offers advice on how to improve your insurance protection.
The company employs human brokers that provide customers with advice regarding insurance and different policies. In a TechCrunch article, Knip co-founder, Dennis Just, mentioned the company’s goals. “We want to build an easier way to experience and interact with your insurances,” he says. “With the Knip app, customers can get an overview of their insurances. They see how much they have to pay for each insurance, when they have to pay and for how long their insurance contract is valid.” Although the company is based in Switzerland, there could be potential for growth to other markets.
Founded in 2007, OnDeck is an online small business lending firm, similar to Funding Circle. The company, almost ten years old, has loaned over $5 billion to more than 60,000 customers in a variety of industries. Numbers such as these are impressive on their own, but where OnDeck truly shines, is its proprietary credit-scoring system. Capable of looking at more than 2,000 data points, the OnDeck Score evaluates a business’ credit worthiness and can make lending decisions in real time. The technology is quite impressive.
Equally impressive is the recent $200 million revolving debt facility that OnDeck has received from Credit Suisse. OnDeck will use this loan in order to fund more of its own loans, as opposed to relying on outside investors.