By Bill Taylor, CEO of Fintegration (FintekNews' parent company)
FINTECH PUSHING $1TRILLION VALUATION
The financial technology (fintech) space, within the overall disruptive technology revolution, is growing at a frenetic pace. And, it’s just beginning. It was reported this week that globally the fintech landscape reaches over 1000 companies, has attracted $105B in funding and is approaching $1Trillion ($870B +/-) in value. Again, it’s just beginning.
An early look at VRProfiles upcoming fintech landscape report sheds a view on a sector that is preparing to go “spaceshot”. The San Francisco based market intelligence platform reported the above numbers and also found one of the biggest data points was that investments in fintech more than doubled from 2014 to 2015. This year looks flat but globally the next few years will begin climbing again.
Naturally with the value of investments in fintech spiking, many new company names will, and are, popping up to join the list of the many household names like IBM, NASDAQ, Citigroup, etc that are transforming their business models to keep up with the changes. How will the general public and investors participate?
I would venture that a good 90% (probably low) of the “real world” does not know what blockchain is, bitcoin (yes), Ethereum (no), cryptocurrency (hmmm, evil), distributed ledger, etc., let alone what they do. So, the answer to how investors may participate will come in the form of new investment vehicles AND new indexes to track the fintech sector. Breaking out the fintech companies from the overall technology sectors has just begun……..literally.
The NASDAQ (yes, the exchange) now refers to itself as a fintech company and has been very innovative in new technology as well as creating a new index. This index, the KFTX, just launched on July 18 and………..well, let’s let them describe it:
“The KBW Nasdaq Financial Technology Index is designed to track the performance of financial technology companies that are publicly traded in the U.S. Since financial technology companies are not easily categorized into a single industry group, Index eligibility is not limited to securities within a particular industry classification. Securities eligible for index inclusion leverage technology to deliver financial products and services. Their distribution is nearly exclusively electronic, with limited to no “bricks and mortar,” and their revenue mix is predominantly fee-based. The Index began on July 18, 2016, at a base value of 1000.”
We at FintekNews have been covering the index with a daily and weekend recap of the new index. As more and more new investing products (ETF’s, hedge funds, mutual funds, etc) concentrate portfolios in the fintech sector it is only natural to think that the KFTX will be the benchmark for those new vehicles.
To date, there are not a lot of ways to invest in just fintech but that is changing rapidly. There is already a bitcoin trust listed (and trading) and the Winklevoss brothers (Facebook left behinders) are awaiting SEC approval for their bitcoin ETF. New fintech ETF’s have just launched and more are planned.
We have also started to feature more crowdfunding stories on our site, and crowdinvesting along with peer-to-peer (P2P) investing also represent a major form of fintech investing that we believe is still in its infancy.
This will be a huge new investment sector that will need to educate RIA’s, family office groups, wealth managers, etc. so that they can advise clients on investments in these new products.
Financial technology (fintech) is the overnight success that began years ago but is now becoming a necessity to every firm’s business model. Times are changing with the overall public still just waking up to the new exciting world. Next stop $2Trillion?