Kreston GCG: 5 FinTech projects everyone needs to know
Fintech companies are confidently conquering the international market of financial and banking institutions. Taking into consideration the current dynamics of market development, already in 2020 financial institutions can cede up to 23% of their business to fintech companies. It is expected that the market of banking payments and money transfers can lose around 28%, other banking services 25%, the asset/wealth management sector 22%, and insurance business 21%.
This is no surprise, since in today’s financial world the volume of data is constantly significantly growing, their data collection and processing is the most effective on the cloud big data market. Fintech services allow for an exclusive client-orientation and an individual approach to everybody.
While bank clerks are still more effective at analyzing consumer preferences, the preferences of intellectual algorithms work better and faster when it comes to data processing. Of course, persistent lobbying of banking groups is quite a powerful hurdle worldwide and does not allow financial innovative technologies to spread with necessary dynamics. However, as I have mentioned before, this process is inevitable. For instance, in South Korea after the economic crisis led to a reduced number of tourists and a generally negative effect on export industries, one government decision was to experiment by reducing regulatory pressure in the financial sector to stimulate the development of fintech services. Further plans included converting the country’s whole banking system to online. It is useful to highlight some fintech projects that actually saw success.
It is useful to highlight some
fintech projects that saw success.
Skrill – the first officially approved electronic payment system in the UK for sending and receiving money, using an email address as an identification. The company was established June 18, 2001 in London. Users can send money from credit or debit cards or transfer money from bank accounts in most countries – members of the OECD. Additionally, Skrill is almost free for participants with personal accounts; the money can be withdrawn with the help of a bank check, via money transfer to a debit or credit card, or through SWIFT transition.
Skrill is different to many payment systems in requiring a login verification before usage of its service; it minimizes fraud and limits the possibility of money laundering. Skrill is a payment scheme that sellers on eBay can offer. Overall, the Skrill payment system carved a special niche in payments related to online casino, bookmakers and other online gambling services.
August 11, 2015 Optimal Payments were bought for 1.1m Euros.
TransferWise – one more service worthy of attention that was started in England by Estonian developers in 2010. Per se, this is a P2P money transfer service that is quite cheap (transferring under 3,000 Pounds is completely free of charge), clear and fast (from 1 to 2 days, but more commonly around 30 minutes) the user can make a transfer, e.g. onto the bank account of the recipient. Monthly turnover in June was more than 500m Pounds, and clients saved more than 22m Pounds compared to other providers. TransferWise supports more than 26 currencies, 48 countries and 360 transfer directions.
On January 25, 2015, seven investment funds (Andreessen Horowitz, Richard Branson, Valar Ventures, Index Ventures, IA Ventures, Seedcamp, and Firestartr) invested $58m in TransferWise. The deal valued it at around $900m.
Moreover, since August 2015 the service can also be used in Ukraine (PrivatBank is the official Ukrainian partner).
Venmo/Braintree – this P2P payment service is managed by PayPal and has become a payment method after they opened to external applications and services. The company was set up on April 4, 2009 in the USA. In 2012 it was bought by Braintree for $26.2m. In 2013, PayPal bought Braintree for $800m.
One of the purposes of the service was optimal ease and intuitive use. Venmo lets the user pay for purchases in other applications, the same way as one would with the PayPal button on websites.
Venmo and Braintree are two services that helped PayPal keep up to date when it became clear that mobile phones became the main access channel to the Internet for millions of people on the planet. An additional proof is the price raise of 6% for PayPal actions after it was revealed the revenue of the firm had an increase of 17% compared to the previous year in the 4th quarter of 2015.
WePay is a leading payment service focused first of all on servicing online platforms that need to regulate money flows between its users. This company was established in 2008 in the USA. The service provides everything necessary for the online market or provides of different cloud services for organizing integrated payments with the help of applications, while keeping a high security level. We are not talking about credit card processing, but a complex solution to managing possible fraud risks, at the same time respecting regulatory norms and providing free support. Each receipt is insured by the Federal Corporation of Deposit Insurance.
WePay has already attracted around $75m of venture capital, and was the 62nd fastest-growing private company in the USA in 2015.
Stripe is a processing company that has announced a service for one-click payments, to avoid being redirected away from the the seller’s website to make the transaction. You can use a generated token to link your card, create a client account and begin the subscription. When a buyer uses Stripe Checkout for the first time on their phone, the service system will ask for credit card credentials and phone number, and will offer to register them. In all further transactions with the use of Stripe (even in different applications and websites that use Checkout), the buyer can simply provide their email address and an SMS code will be automatically sent to their number linked to the account. Inputting the code confirms all owner credentials, with no need to enter payment information in different applications an enormous number of times.
The company was founded in 2010 in the USA. During deals in 2014 the assessed value of the company was $3.5m.
These are just some examples of successful services that started playing important roles in the worldwide financial sector. And remember, while you are reading this article, through trial-and-error without cease new genius startup ideas are being born that will be able to change the whole financial world.
Oleg Kuznietsov, Partner of Kreston GCG