The Twelve Days of Fintech

> Posted by Elisabeth Rhyne, Managing Director, CFI

Amidst all the excitement about disruptive fintech innovators it helps to sort out what innovations are actually at play. Australia Wealth Investors, together with KPMG-Australia and Australia’s Financial Services Council, have created a list of the top 50 fintech innovators for 2014, based on a combination of ability to raise capital and subjective judgment about the degree of innovation or disruption the company represents.

I clicked on all 50 (so you don’t have to) to get a sense of where the action really is. Here’s my quick and dirty categorization. It may help to read this to the tune of “The 12 Days of Christmas”, starting with:

• 11 investment management and stock trading companies. Clearly, innovators go where the money is. The top-ranked company, Wealthfront, is into investment management. (And so is Australia Wealth Advisors, the provider of the list. I’m just saying…)
• 8 e-payments companies. From Klarna to Dwolla, these companies have the coolest names. M-Pesa, surprisingly, is pretty far down the list, in 48th. 
• 6 business crowdfunding websites. These range from relatively retail sites like Funding Circle to AngelList (not to be confused with Angie’s List), which finds angel investors and arranges syndications. Kickstarter, which funds arts and creative projects, is part of this group.
• 5 peer to peer lenders. In some ways, they could be combined with the business crowdfunding sites, as they all provide a matchmaking service. I wonder if any of their principals started out with Match.com.
• 3 big data companies. Given the level of hype about big data, this number is surprisingly small. One company, Kreditech, specializes in credit scoring, while the other two offer a range of customer analytics as well.
• 3 personal loan companies. Wonga, the U.K.-based company recently in the news for poor consumer protection practices, made the list.
• 3 small business lenders. Two provide standard loans. Receivables Exchange, does receivables finance.
• 2 international money transfer companies.
• 2 financial advice services.
• 2 bitcoin transaction facilitators.
• 2 back-office platforms.
• 1 accounting software provider.
• And an ATM network in Chennai. (You can actually sing that one.)

I found it helpful to look at the fintech world through this lens. It did provide some surprises, though it is hard to know how representative the list actually is. If this list accurately reflects what is going on, it is clear that the payments space is heavily contested right now, that back office has taken a back seat, and that very few innovations actively seek to build the capability of consumers.

Geographic distribution is interesting, too. The list has a strong first world and Anglophone bias, with by far the greatest number of companies headquartered near Silicon Valley, followed by London. A few U.S. surprises included businesses located in New Orleans, Des Moines, and Atlanta. Middle and lower income countries are represented only by China, India, and Kenya (one each).

I’d like to see a list of the 50 top financial inclusion fintech innovators – companies aiming at the base of the pyramid in middle and lower income countries. I’m sure such a list would rival this one in terms of variety and creativity. Perhaps Omidyar or Accion’s Frontier Investment Group and Venture Lab would create a list like that. I’m throwing out the challenge…

Image source: Pixabay 

Have you read?

Four Barriers – and Four Solutions – to Financial Inclusion Through Payment Innovations

Financially Included Through Crowdsourced Financing?

Accion Venture Lab Responds to ‘The Great Competition and Innovation Deficit’