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What is the Impact of US FinTech
on Banks: Ken Research
The pursuit of customer centricity has become a main priority for all sorts of
financial institutions. The digital consumer’s preference for a superior
customer experience, quick response and convenience has accelerated the
products and solutions offered by FinTech companies.
Disruptive Effect
Although banks have been slow to adopt technological changes owing to
security issues, banking has been one of the sectors that is most resistant to
disruption by technology. Retail, media and travel are three of the many
sectors that have been significantly disrupted by technological shifts.
Banking had largely remained unharmed due to strict regulatory barriers.
However, public trust and confidence in this sector is quite low presently and
banks and have been hit by sanctions and political rebuke.
Online payments are still a cumbersome process with users needing to type in
usernames, passwords, 16 digits from the credit card and other things.
Payment wallets and payment gateways have transformed the way customer
make payments.
Consumer banking, fund transfer and payments are the sectors that are at high
risk of disruption by the FinTech industry in the next 5 years. Emergence of
online platforms has allowed individuals and businesses to lend and borrow
between each other. Establishment of alternative credit models, use of non-
traditional data sources and powerful data analytics to value risks, quick
disbursement of loans and low operating costs have allowed the FinTech
companies to flourish. Moreover, technology driven payment processes and
digital wallets that enable easier payments have led to increased use of
smartphone and other devices to transfer money and make payments.
Collaborative Effect
Traditional financial institutions are aware of their inefficiencies, slow
processes and high fixed costs involved into every transaction. FinTech
companies are not just bringing concrete solutions to consumers but also
empowering them by providing new services which can be delivered with the
use of technological applications. Digital services have been able to address
their needs in a more convenient way than traditional nine-to-five financial
institutions. Although FinTech companies have been chiefly successful in the
transaction and lending aspect of the banking industry, they have had almost
negligible effect on traditional banking operations such as deposits and large
volume loans.
It is highly unlikely for FinTech companies to replace traditional banks and
both can co-exist in a symbiotic relationship…
Collaboration between FinTech and traditional institutions can be an
effective way to identify challenges and opportunities as well as to gain a
deeper understanding on complementing each other.
How has the Equity Crowdfunding Market Placed?
Crowd funding involves individuals who pool money using a platform to fund
the projects by other people or organizations and Equity crowdfunding involves
trading equity of a company for the cash collected by the investors. Till 2015,
the regulations in the U.S. only permitted accredited entrepreneurs to raise
money from equity crowdfunding. These investors have to meet certain levels
of wealth, established by the SEC. However, in the near future the SEC would
make it legal for entrepreneurs to raise money from the individuals who are
not professional investors as well.
The major players in the market include EquityNet, Fundable, Angel List and
Crowdfunder with a market share of ~%, ~%, ~% and ~% respectively Equity
crowdfunding have observed rapid growth in last few years especially after
JOBS act passed in 2012 owing to the above propelling factors. This is coupled
with higher comparative regulations in collecting equity funds from other
sources. The other important factor which provided an impetus to the equity
crowd funding market is the growth of startups in the country and also the
implication that the entrepreneurs can move up from seed funding to different
levels of funding. This provides them with easy access to the required capital.
The government has been looking forward to boost the confidence for the
investors to invest in the market. The title 3 of JOBS act’s regulation CF passed
in May 2016 has already allowed the individual investors to invest in the market,
further rules and regulations would definitely help boost the investor
confidence such as the platforms would have to purchase a fidelity bond of at
least USD 100,000 as insurance for crowd funding. However these steps will
impact the marketplaces by increasing their operational costs.
In the short run the market would incline at a rapid rate on the back of
increased investments by the individual investors, pro investor regulations of
the government and increased data availability. This would help the market
grow to USD ~billion by 2017.
Further in the longer run, the realization of the disadvantages to the
unsophisticated investors, inclined interest rates and higher interest of the
institutions would collectively have a dampening impact on the market and slow
down the growth rate of deal values in the US Equity Crowdfunding space and
lead the market to USD ~billion by 2020.
Key Factors Considered in the Report
Comprehensive analysis of the US FinTech market and its segments
Listed major players and their offerings
Identified major developments in last few years and assessed the future
growth of the industry
Government initiatives taken to stimulate the growth of the market.
United States Market Trends Fintech
Business Lending Market Future
Global Fintech Market
Challenges Fintech Market
Financial Services FinTech Industry
Fintech Market Growth
Top Financial Technology Market
Mobile Payments Market
Money Transfers Market United States
Digital Commerce Market
Marketplace Lending Industry
Loan Disbursed FinTech
Companies Cited in the Report
List of Major Companies Companies Covered in the Report
Android Pay
Angel List
Apple Pay
Authorize.Net
Chase QuickPay
Crowdfunder
Dwolla
EquityNet
Fundable Major Players
Lending Club
OnDeck Capital
PayPal
Stripe
Vanguard
Venmo
Wealthfront
For more information about the publication, refer to the below link:
https://www.kenresearch.com/banking-financial-services-and-
insurance/financial-services/us-fintech-market-report/54351-93.html
Related Reports:
https://www.kenresearch.com/banking-financial-services-and-
insurance/financial-services/cards-payments-industry-us-emerging-trends-
2019/3456-93.html
https://www.kenresearch.com/banking-financial-services-and-
insurance/financial-services/north-america-mobile-money-market-
research-report/632-93.html
Contact Us:
Ken Research
Ankur Gupta, Head Marketing & Communications
Ankur@kenresearch.com
+91-9015378249
What is the Impact of US  FinTech on Banks: Ken Research

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What is the Impact of US FinTech on Banks: Ken Research

  • 1. What is the Impact of US FinTech on Banks: Ken Research
  • 2. The pursuit of customer centricity has become a main priority for all sorts of financial institutions. The digital consumer’s preference for a superior customer experience, quick response and convenience has accelerated the products and solutions offered by FinTech companies. Disruptive Effect Although banks have been slow to adopt technological changes owing to security issues, banking has been one of the sectors that is most resistant to disruption by technology. Retail, media and travel are three of the many sectors that have been significantly disrupted by technological shifts.
  • 3. Banking had largely remained unharmed due to strict regulatory barriers. However, public trust and confidence in this sector is quite low presently and banks and have been hit by sanctions and political rebuke. Online payments are still a cumbersome process with users needing to type in usernames, passwords, 16 digits from the credit card and other things. Payment wallets and payment gateways have transformed the way customer make payments. Consumer banking, fund transfer and payments are the sectors that are at high risk of disruption by the FinTech industry in the next 5 years. Emergence of online platforms has allowed individuals and businesses to lend and borrow between each other. Establishment of alternative credit models, use of non- traditional data sources and powerful data analytics to value risks, quick disbursement of loans and low operating costs have allowed the FinTech companies to flourish. Moreover, technology driven payment processes and digital wallets that enable easier payments have led to increased use of smartphone and other devices to transfer money and make payments.
  • 4. Collaborative Effect Traditional financial institutions are aware of their inefficiencies, slow processes and high fixed costs involved into every transaction. FinTech companies are not just bringing concrete solutions to consumers but also empowering them by providing new services which can be delivered with the use of technological applications. Digital services have been able to address their needs in a more convenient way than traditional nine-to-five financial institutions. Although FinTech companies have been chiefly successful in the transaction and lending aspect of the banking industry, they have had almost negligible effect on traditional banking operations such as deposits and large volume loans. It is highly unlikely for FinTech companies to replace traditional banks and both can co-exist in a symbiotic relationship… Collaboration between FinTech and traditional institutions can be an effective way to identify challenges and opportunities as well as to gain a deeper understanding on complementing each other.
  • 5. How has the Equity Crowdfunding Market Placed? Crowd funding involves individuals who pool money using a platform to fund the projects by other people or organizations and Equity crowdfunding involves trading equity of a company for the cash collected by the investors. Till 2015, the regulations in the U.S. only permitted accredited entrepreneurs to raise money from equity crowdfunding. These investors have to meet certain levels of wealth, established by the SEC. However, in the near future the SEC would make it legal for entrepreneurs to raise money from the individuals who are not professional investors as well. The major players in the market include EquityNet, Fundable, Angel List and Crowdfunder with a market share of ~%, ~%, ~% and ~% respectively Equity crowdfunding have observed rapid growth in last few years especially after JOBS act passed in 2012 owing to the above propelling factors. This is coupled with higher comparative regulations in collecting equity funds from other sources. The other important factor which provided an impetus to the equity crowd funding market is the growth of startups in the country and also the implication that the entrepreneurs can move up from seed funding to different levels of funding. This provides them with easy access to the required capital.
  • 6. The government has been looking forward to boost the confidence for the investors to invest in the market. The title 3 of JOBS act’s regulation CF passed in May 2016 has already allowed the individual investors to invest in the market, further rules and regulations would definitely help boost the investor confidence such as the platforms would have to purchase a fidelity bond of at least USD 100,000 as insurance for crowd funding. However these steps will impact the marketplaces by increasing their operational costs. In the short run the market would incline at a rapid rate on the back of increased investments by the individual investors, pro investor regulations of the government and increased data availability. This would help the market grow to USD ~billion by 2017. Further in the longer run, the realization of the disadvantages to the unsophisticated investors, inclined interest rates and higher interest of the institutions would collectively have a dampening impact on the market and slow down the growth rate of deal values in the US Equity Crowdfunding space and lead the market to USD ~billion by 2020.
  • 7. Key Factors Considered in the Report Comprehensive analysis of the US FinTech market and its segments Listed major players and their offerings Identified major developments in last few years and assessed the future growth of the industry Government initiatives taken to stimulate the growth of the market. United States Market Trends Fintech Business Lending Market Future Global Fintech Market Challenges Fintech Market Financial Services FinTech Industry Fintech Market Growth Top Financial Technology Market Mobile Payments Market Money Transfers Market United States Digital Commerce Market Marketplace Lending Industry Loan Disbursed FinTech
  • 8. Companies Cited in the Report List of Major Companies Companies Covered in the Report Android Pay Angel List Apple Pay Authorize.Net Chase QuickPay Crowdfunder Dwolla EquityNet Fundable Major Players Lending Club OnDeck Capital PayPal Stripe Vanguard Venmo Wealthfront
  • 9. For more information about the publication, refer to the below link: https://www.kenresearch.com/banking-financial-services-and- insurance/financial-services/us-fintech-market-report/54351-93.html Related Reports: https://www.kenresearch.com/banking-financial-services-and- insurance/financial-services/cards-payments-industry-us-emerging-trends- 2019/3456-93.html https://www.kenresearch.com/banking-financial-services-and- insurance/financial-services/north-america-mobile-money-market- research-report/632-93.html Contact Us: Ken Research Ankur Gupta, Head Marketing & Communications Ankur@kenresearch.com +91-9015378249