Fintech Trends 2018: Companies Broaden Horizons

Fintech had a polarized year in 2018 with several small and mid-cap companies expanding their businesses while banking firms and venture capitalists played the waiting game—at least in Canada—owing to the impending Bank Act.

In the US, one of the major news stories of the year was 12 US Community banks forming a fintech alliance to fast track the technology’s adoption in the country.

KPMG’s review of the first two quarters of the year said that  global investments in fintech hit US$ 57.9 billion across 875 deals, which exceeded the total annual investment in the space in 2017.

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On that note, the Investing News Network (INN) takes a look back at the biggest trends of the year with comments from industry experts.

Fintech trends 2018: Companies expand businesses

Some of the major news stories in the space for 2018 were business expansions of companies across the world.

MoneyGram (NASDAQ:MGI) announced in December the launch of its new mobile app in US and 14 other countries. The app includes several features, including biometric identification, location finder and transfer tracking. The company said that more than 70 percent of its online transactions were made on mobile devices.

“2018 has been an incredible year of growth for our digital platforms,” Alex Holmes, CEO of MoneyGram, said in the release.

Also in November, the company announced the expansion of its digital domains to seven new countries, bringing its total presence to 24 countries.

“These actions support our commitment to offer our customers a true omni-channel experience when they transact with us,” Holmes said in the December release.

In Canada, several companies have been expanding their businesses by adding new markets to their platforms or adding new clients to their existing customer bases. It also has to be noted that Canadian Prime Minister Justin Trudeau placed the Canadian fintech space in the spotlight during his visit to Singapore in November.

In August, Vancouver-based Mogo Finance Technology (TSX:MOGO) announced the expansion of its services to five new provinces and thus offering its product portfolio to over 20 million Canadians.

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The company, which offers six financial products that range from credit monitoring solution to its Mogo Card, also announced it surpassed 700,000 members..

Another company that has been expanding its business is Mobi724 (TSXV:MOS). However, its CEO Marcel Vienneau stated the lack of small cap companies on investors’ radar has had an effect on the industry.

“Small cap fintech companies were not in the focus of attention of investors’ community in 2018,” Vienneau said in a email statement to INN. “This trend impacted the entire industry. We believe that investors do not see its true value in the country.”

Mobi724 announced an expansion to Philippines in May and over the course of the year, announced further expansion in the Americas.

“We were expecting to reduce our sales cycle from some 20 months to less than one year and we planned to go live in 2 countries,” Vienneau said. “We are now signing new deals within the less than 12 months and we should be able to be live in 5 or 6 countries before the end of year.”

Further, Vienneau said that the company is in the process of launching simultaneously with clients in Latin America and that its relationship with Visa (NYSE:V) for Latin America and Caribbean (LAC) region has been “developing well.”

Fintech trends 2018: “Record year” for sector

Multiple reports have suggested that fintech had a “record year” in 2018. KPMG’s latest report  on the sector from July said that global investments in the sector already exceeded last year’s annual total.

As noted, KPMG said that  global investments in fintech companies reached US$ 57.9 billion across 875 deals in the first half of the year. The firm also suggested that the market is expected to remain strong for the remainder of 2018, while also indicating that leading players in the “payments” vertical would continue to focus their efforts on product expansion.

In specific regions, 96 percent of the deals in the Americas were suggested to have originated from the US. Further, the firm said that Canadian deal value, which dropped from the second half of 2017, remained strong in terms of the deal volume.

“A number of the larger financial institutions in Canada have recognized the need to invest in fintech and have made significant inroads in terms of both making investments and in developing partnerships to help move innovation forward,” the firm said in the report.

One of the larger financial institutions is the Royal Bank of Canada (TSX:RY) which in June chose to put more focus on digital platform at the cost of physical bank space.

“We are seeing more and more clients chose to interact through digital,” Neil McLaughlin, group head of personal and commercial banking at RBC, said at the investor conference in June. “We are seeing mobile become our number one channel (in digital space). From a cost perspective, this is a positive trend for us. We are quite excited about it.”

KPMG also noted that the Canadian government is in the midst of updating the Bank Act, which is set to be formalised in 2019. The firm believes that venture capitalists and fintech companies would be putting more efforts into the space when the policy is updated.

Meanwhile Fintech Global said that global investments have reached US$ 54.4 billion across 1,188 deals, with the sector showing its largest growth since 2014.

Further, the firm suggested that the funding for the sector has seen an increase of 66.9 percent from last year’s total. Crucially, it was said that the North American companies have dominated global deal activity, with 42 percent of total value invested in companies based in North America.

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Fintech trends 2018: Investor takeaway

Fintech has certainly evolved, as evident from the large value of deals and more institutions  putting their focus on the sector.

With several small and mid-cap companies expanding their businesses in 2018. and with larger companies moving into the vertical, it’s an exciting time for investors to be in this space.

Stay tuned for our fintech outlook for 2019 and beyond for what’s in store for the industry’s future.

Don’t forget to follow us @INN_Technology or real time updates!

Securities Disclosure: I, Bala Yogesh, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

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