Telco 2.0™ Research

The Future Of Telecoms And How To Get There

Understanding Fintech: Why Interest and Investment Has Exploded

Summary: Investment in fintech has increased by 500% in the last 3 years. Interest and investment has spiked as fintech companies seek to leverage new sources of data to develop disruptive offerings across a broad range of financial service areas (e.g. payments, lending & funding). The scale and scope of investment and activity represents a potential paradigm shift within financial services. Telcos, who have a long history developing financial services (e.g. mobile money), need to understand this changing landscape. This report explores why fintech is happening now and maps where and how it is disrupting established financial services. (Executive Briefing Service and Dealing with Disruption Stream, October 2016)

Fintech

 

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Below is a 1 page extract from this 23 page Telco 2.0 Report that can be downloaded in full in PDF format by subscribers to the Executive Briefing Service and Dealing with Disruption Stream here. The full report includes an Executive Summary, along with further detailed content and figures outlined below the extract. To find out more about how to join or access this report please see here or call +44 (0) 207 247 5003.

 

Introduction

Why should telcos care about fintech? Telecoms operators have long been interested in financial services, especially consumer-facing financial services. STL Partners has discussed the relationship between telecoms and financial services in a range of prior reports, from Digital Commerce: Show Me the (Mobile) Money, to Apple Pay and Weve Fail: A Wake Up Call, and from Telco-driven Disruption: What NTT DoCoMo, KT, and Globe Got Right, to Digital Commerce 2.0: New $50bn Disruptive Opportunities for Telcos, Banks and Technology Companies.

It is fair to say that telcos have found only mixed success in financial services. While certain operators have had great success in recent years providing mobile money services, there have also been many examples of telco incursions into financial services that have not paid off. On the other hand, there have been many instances of successful disruption in financial services – even technology-led digital disruption. PayPal is the foremost example of a digital business that originally found a niche doing something that banks had made quite laborious – online payments for goods between private individuals – and making it easier. But these disruptions have, to date, been limited and individual. Why, then, should telcos pay attention now?

In the last two years, the wider landscape of financial services has begun to change, as the established players have faced disruption on multiple fronts from a large number of new businesses. This has become known as fintech, and interest and investment are taking off:

Figure 1: Google Trends search on ‘fintech’, 2011 - 2016

Google trends analysis

Source: Google Trends


Fintech therefore represents a potentially huge shift in the status quo in financial services: this short report provides an overview of this shift. STL Partners will follow up with a report that considers options for telecoms operators, and makes some strategic recommendations. 

 

...to access the other 22 pages of this 23 page Telco 2.0 Report, including...   

  • Executive Summary
  • Introduction
  • Disrupting the Financial Services Industry
  • Defining fintech
  • Why fintech's time has come
  • The state of the ecosystem: investment is accelerating
  • Key Capabilities and Service Areas
  • Fintech specific capabilities: doing the same, but differently
  • Fintech service areas: Diverse and developing
  • The Future of Fintech
  • Growth ahead
  • ...but there are uncertainties around the future evolution
  • The uncertainties could still play out well for start-ups
  • Conclusion and Outlook

 

...and the following figures...

  • Figure 1: Google Trends search on ‘fintech’, 2011 – 2016
  • Figure 2: Fintech companies are disrupting financial services
  • Figure 3: Global Investment in Fintech
  • Figure 4: VC-backed Investment in Fintech, by Region
  • Figure 5: A framework for understanding fintech
  • Figure 6: Fintech start-ups within each service area

 

...Members of the Executive Briefing Service and Dealing with Disruption Stream can download the full 23 page report in PDF format here. For non-members, to find out more about how to join or access this report please see here or call +44 (0) 207 247 5003. 

 

Technologies and industry terms referenced include: 

analytics, banks, big data, blockchain, customer engagement, disruption, financial services, fintech, insurance, investment, mobile money, payments, technology, telematics