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All The Fintech - Reviewing 2018 Thoughts on Fintech - 12.19.18

December 19 · Issue #31 · View online
All The Fintech
I thought it would be interesting to take a look back on what I wrote about in 2017, and see which ones were on the mark and which ones were way off. In the meantime, please send me any thoughts you have on where fintech may go in 2019 via Twitter, email, or even snail mail. I’ll publish as many takes as possible (let me know if you want it to be anonymous) as well as my own :).
Review of 2018 thoughts:
1) The cryptocurrency market will collide with regulation - and I wouldn’t be surprised if it came through an enforcement or criminal action. The amount of wealth creation combined with a lack of KYC/AML on a lot of random exchanges is a bad mix.
Yup, this one was easy to see, also a bit amusing to see who got caught up.
2) I have no clue where crypto prices are going to go - that being said, I would be surprised if the largest coins (bitcoin, ether, etc) went up 100x again, but would not be surprised if they went up 10x or went down 100x. “Investing” in crypto is 100% speculation and no one can deny it’s a bubble, the question is when will that bubble pop. Might take several years…
Bitcoin was 16k a year ago! Now sitting around $3k in what seems to be a very long bear market. In retrospect this one was pretty easy, just a bet for continued volatility vs stability.
3) Increased M&A and investment activity from large financial institutions - I think we’ll start to see a lot more M&A and investment opportunities from large banks. Over the past 3-4 years, almost every large bank has built out a dedicated “fintech” function as it relates to product, strategy, and investing. I think 2018 is when a lot of these groups start to crank on opportunities. 
Yup, Goldman led the way with their acquisitions of Clarity Money + Final. I actually expected more acquisitions from other bulge brackets, but their strategy has seem to be to build in house - for example see Chase’s Finn and YouInvest platforms.
4) Increased VC activity in B2B - The largest VC firms seem a bit tapped out as it relates to consumer fintech (or have existing portfolio companies), and the focus for 2018 looks like it’s going to shift towards B2B / infrastructure plays. 
Waiting for some 2018 fintech reports on this one, but seems generally true…
5) Growth areas - I expect a lot more companies to get funding in the insurance, tax, crypto infrastructure, B2B payments, SME Lending, and security spaces. 
TBD, still doing some more research on this one.
6) AI is overhyped - AI seems to be the new blockchain. Reminds me of the “explosion” of big data in financial institutions a few years ago. I find that most fintech AI companies are not doing anything extremely novel, the key is the data not the algorithms. That being said, I think we’ll see a lot more application for helping humans process and understand output, so more of an “augmenting AI” play here. 
AI as core to the product vs AI as a service seems to have won out here IMO.
7) Voice is not the new blockchain…yet - I don’t think 2018 will be the breakout year for voice. Voice is super frustrating unless it’s 99.999% accurate (a totally made up stat by me) and I don’t see a killer use case for my finances yet. I’d still rather click through (intelligent and contexual) options rather than have a dynamic free form with my voice when interacting with my finances.
I think this is still true.
8) More awareness and ownership by the consumer of their data - I think there will be a shift in how data is monetized in the ecosystem. Historically, financial data was shared, broadcasted, bought, and sold across the industry without much consumer interaction (i.e. credit scores). However, consumers have become increasingly aware of the effect this black box data sharing has on their lives. I expect to see a lot more dialogue with banks, consumers, media, and regulators on this topic. 
Yup. Didn’t see Cambridge Analytics + Facebook coming along, but that certainly brought broader data sharing privacy and data monetization into the forefront.
9) Continued convergence to full stack fintech - I wouldn’t be surprised if there’s a big acquisition or merger between two “larger” consumer fintech entities with different products and different consumer profiles to go more full stack + diversify revenue. I also expect companies to offer new secondary products that follow their user base (e.g. Robinhood launching crypto trading, Coinbase launching a ratings desk, etc)
Everyone seems to be launching a debit card + checking account nowadays! Not as much in regards to large consumer fintech mergers quite yet, but there were a lot of smaller acquisitions throughout the space. (e.g. Coinbase acquiring, Credit Karma acquiring Noddle + Approved + Penny). B2B saw some more activity such as Square acquiring Weebly for 365M as well as Zesty, Stripe acquiring Index, Birch by Even Financial, etc.
10) A lot more consumer fintech companies focused on specific communities - There are ton more APIs + developer platforms in market that are making it easier to create a financial product from scratch. This starts to open up more typically underserved markets (sub-prime, thin file, minority cohorts, etc) and I think we’ll see more “niche” plays in consumer fintech to try and gain initial traction.
Will need to take a closer look here :)
11) Amazon and Paypal are the companies to watch - Ahh yes, the common “watch out for the large companies” making moves towards banking. That being said, I think Amazon will continue to offer new financial products for SMB’s while PayPal will continue to make in-roads with consumer wallet share, maybe even a mobile bank? 
Paypal acquired Hyperwallet for $400M and iZettle for $2.2B; I actually think that Square might have had just as big of a year too in regards to product development + releases.

The So What
Fintech startup Plaid raises $250M at a $2.65B valuation – TechCrunch
Robinhood Will Retool Checking Product Following Scrutiny - Bloomberg
We got a banking licence 🎉
Wells Fargo debuts banking app for Uber drivers, other gig workers
Temenos to acquire digital onboarding firm Avoka
Want a Better Credit Score? Soon, Your Cellphone Bill Could Help - WSJ
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