A new wave of data-driven disruptors are transforming the banking industry.
A new generation of financial technology startups are changing the world of finance in ways that were once considered unimaginable. They’re making it easier for businesses to manage their investments using artificial intelligence, transfer funds across borders in less time and help clients raise funds using robo-advisors.
Follow the money
It’s not hard to see why financial technology startups are growing in popularity. This year, they’ve managed to raise $8 billion globally, close 469 deals and push six startups into “unicorn” status.
#Fintech startups won’t put banks out of business anytime soon, but they’re growing in influence.
In years past, most financial institutions focused on partnering with emerging startups in order to better leverage their expertise. Although, all that that may soon change.
As the industry continues to innovate, traditional firms are concentrating less on strategic partners and more on outright acquisitions. This allows them to better integrate new technology into their workforce. It also prevents competing companies from benefiting from that same technology.
The revolution behind the scenes
More institutions are seeing how beneficial acquiring startup technology can be for the bottom line.
A 2016 report by IDC and SAP found a quarter of global banks were interested in buying a fintech company. By 2017, Pricewaterhouse discovered that a whopping 50 per cent of surveyed companies planned on purchasing a startup.
Some of the more notable acquisitions made just this year include JP Morgan’s purchase of online payment service WePay for around $220 million and Moneyfarm’s purchase of online advice service Ernest for an undisclosed amount.
So, what’s driving this change? Money, of course.
The same report found that acquisitions increase adoption rates and make it easier to integrate necessary technology. “By adopting one of the many solutions brought by innovators, Financial Institutions can gain incremental returns and find a way to expand new products and services and reach new customers.”
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