Fintech - Thematic Research

Fintech - Thematic Research

Summary

Fintech' originally referred to a variety of new entrants, free from legacy, and often able to bypass bank regulation, operating primarily direct-to-consumer business models. Today, the term has evolved to become a catch-all for all types of financial and technology propositions, regardless of provider type, business model, and target customer segment. This report examines how fintech is transforming all subsegments of financial services, via new entrants’ propositions and incumbent bank modernization, covering payments, lending, wealth management, banking services, and beyond.

Following a record-breaking investment year in 2021, which followed a record-breaking investment decade from 2010 to 2020, fintech activity has slowed under more difficult economic conditions. The 15 years of low interest rates have distorted the market, and the next five will see a return to economic fundamentals. There are big questions around future funding rounds, valuations, and underlying interest rates, but also more fundamentally the true underlying performance of many individual businesses.

Scope

• 20 years of fintech driven disaggregation – or “unbundling” – has culminated in the rise of embedded finance, which will bring heightened levels of disruption, as ever-smaller pieces of banking can be unbundled and re-bundled in new ways.
• Many banks will view banking as a service a sensible way to co-exist with the network advantages of big tech firms, and the growing role of super apps. With rates rising, that net interest margin position will reap more rewards. However, regulatory changes, around interchange and capital reserves, risk drastically changing the economics of that business model.
• 2021 was the peak year for fintech activity across all signals data, including news items, hiring, patent applications, company fillings, social media mentions and M&A activity. From 2022 onwards, all early indicators have gone into decline, consistent with a broader deterioration in the economic environment.

Reasons to Buy

• Understand key technology, macroeconomic, and regulatory trends in fintech.
• Determine which fintech subsectors are most disruptive and why.
• Access fintech signals data across patents, hiring, corporate filings, social media mentions. and M&A activity.
• View firm-level insight on the leading private and public players within the fintech theme.