Did you know Fintech startups accumulated $34.5 billion in global funding in 2019 alone?
The fintech industry is on the rise, and startups appear on the horizon in almost every sector. The credit goes to the market demand in the digital arena for more and more financial services. The new-age Fintech startups in 2021 are trying their best to meet customers’ needs and shape up the future of the financial services sector.
What is Fintech?
Fintech is an acronym for financial technology. The term refers to new technology that enables automation and improvement in using and delivering financial services. At its core, companies, business owners, and consumers use Fintech to measure their financial processes and operations effectively.
For that, different Fintech companies use specialized algorithms and software using a state-of-the-art computer and IT infrastructure. Furthermore, Fintech technology mainly focuses on, on-the-go financial solutions that rely primarily on smartphones to access and use financial products and services.
When the Fintech services initially emerged at the beginning of the 21st century, it applied specifically to technological solutions used at the back-end infrastructure of any established financial institution. However, there has been a consistent shift ever since, and now Fintech is a more consumer-oriented service.
Hence, a consumer-focused definition for Fintech now entails various industries and sectors. These include retail banking, education, investment management, non-profit and fundraising, etc.
Fintech also involves the use and development of cryptocurrencies like Bitcoin. However, while the crypto-coin segment of Fintech enjoys more media coverage, the conventional global banking sector still comprises a significant proportion with a market capitalization of multi-trillion dollars.
The innovative Fintech startups are driving their growth by attracting investors to offer financial services and products. However, the more startups appear, the more challenging it will be to sift through the better or more successful ones.
The six significant areas of Fintech startups are:
- Investment management
- Banking payments
- Wealth management
- Currency and exchange
- Lending and financing
Need for Fintech’s Expansion and Startups
Up until now, the financial industries offering various products and services, have been under one umbrella. Moreover, the scope of such products and services involves a broad spectrum. The services range from conventional banking activities to trading and mortgage services.
The new Fintech startups have started to emerge and unbundle these products and services to offer them individually. This ‘streamlined’ approach allows Fintech organizations to reduce their costs for each transaction.
The only way to describe how Fintech startups changed the traditional financial industry is the disruption. For instance, the financial services and products once belonged to salespeople and desktop computers. However, Fintech has been a game-changer, moving financial services to mobile platforms. That challenged the monopoly of large entrenched financial institutions.
For example, Robinhood is a mobile-exclusive trading platform that charges no fee for trading. Another example is Prosper Marketplace that offers peer-to-peer landing without any services charges. In addition, several other lending institutions promise to lower the financial products and services rates by opening your loan’s competition to broader market forces.
Business loan providers including Lendio, Accion, Kabbage, and Funding Circle are also popular startups. These established companies offer fast and accessible platforms to access working capital. For example, Oscar is an online insurance startup that secured a $165 million funding back in 2018. The best part is that such funding rounds are a common trend for Fintech startups worldwide.
The conventional banking sector is investing heavily to become more like Fintech companies. For instance, Goldman Sachs, an investment bank, launched a consumer lending platform known as Marcus in 2016. In addition, the institution went international and expanded its operations to the U.K.
However, keeping pace with the Fintech industry needs a lot more than ramped-up technological solutions. Instead, the companies must invest more into research and analysis. That will help them develop a sophisticated Fintech solution that works for their operations and processes.
That’s where startups have an advantage. These companies can benefit from well-researched processes to develop an overall corporate structure. According to a study, over 88% of the traditional financial organizations believe that they will lose a share of their business to Fintech organizations in the next five years.
Top 10 Fintech Startups to Lookout for in 2021
Here are the top 10 Fintech startups that have been making a buzz around the world. Let us find out a bit about these companies.
1. Plum Fintech Limited
The company has been in business since 2016. Based in London, United Kingdom, the company has a regular search growth status with a 99 times 5-year search growth. So far, the series of funding raised by the company is $37.3 million. Plum Fintech is a mobile application offering personal saving and investment services. The platform currently offers investment recommendations to users. You can register with this startup and opt for free. However, three paid plans range from £1 to £4.99.
According to Victor Trokoudes, the founder of Plum Fintech, the startup currently has more than 650,000 registered users with around 5,300 employees.
This startup began in the year 2019 with the head office based in Lagos, Nigeria. The company has so far generated over $150,000 funding in a pre-seed round. The Fintech platform offers excellent investment tools for businesses and individuals.
The Fundall app provides spending analytics to its users to help them evaluate their financial habits. Fundall has more than 10,000 active users. Currently, three employees are working for the company.
As the name suggests, SportTrade is a sports trading and betting exchange. Hailing from Camden, New Jersey, in the U.S., the startup has been in the business since 2018. To this date, the company has generated $36 million approximately.
You can bet on sports bets just like trading for stocks. However, this platform applies an unconventional approach to sports betting as its model is the same as the financial stock market. There are currently 9 investors backing this startup. The company now has between 11 to 50 employees.
The startup belongs to the wholesale financial market industry. Operational since 2016, TreasurySpring has been based in London, United Kingdom, with a funding of over $14.5 million.
The company’s software offers to minimize risks and maximize returns via fixed-term funds (FTFs). TreasurySpring is currently offering financial, corporate, and sovereign FTFs. The company now has 19 employees working for the brand.
The startup opened its doors for business in 2018, with a 5-year search growth of 20%. The company’s head office is in San Francisco, California, and has a financial backing of $1.6 billion in funding (Series D).
Figure offers financial services that use Blockchain technology for both business and personal use. This startup currently offers financial products revolving around home equity, mortgages, and personal loans.
The company also assists with asset management, marketplace services, and cap table management for institutions. The company has between 250 and 500 employees working.
With a phenomenal 5-year research growth, Stockal started its career as a stock advisory firm in 2016. The startup from New York generated more than $5.8 million in a seed round. In addition, the company offered research-based advisory services to investors.
However, in 2018, Stockal changed its digital infrastructure with a new goal. That helped international retail investors to invest their money in the global marketplace such as the United States. The company is currently offering its services to India and plans to expand into Southeast Asia and the Middle-Eastern region. Stockal has between 60 and 72 employees.
Goherny, a money management startup from London, UK, has been operational for a decade. With a funding of $66.2 million, the company educates young adults about handling their finances. It allows children to manage their finances via pre-paid debit cards, with parents having primary control over the cards.
The company so far reports that there are more than 1 million paying customers who are using their service. There are now 176 employees working for this company.
Launched in 2013, Chimes is a neo-bank that offers mobile banking solutions to its users with zero charges. The company has FDIC insurance and a customer base of more than 12 million. So far, the company has generated $2.6 billion with 1299 employees.
The Singaporean startup started in 2020 and has a funding of over $1.7 million with 100% 5-year search growth. The company offers a bookkeeping automation solution in software using human-assisted artificial intelligence. This automated solution can generate reports and update financial ledgers to provide analytics.
The company’s goal is to reduce the time it takes for bookkeeping and eliminate accounting errors for in-house teams. Currently, 5 employees are working for this Fintech startup company.
With a location in Menlo Park in California, Robinhood is a stock brokerage company that has been around since 2013. So far, the company’s funding is about $5.6 billion. Robinhood offers a variety of options to retail investors. These include opportunities for trading stocks, cryptocurrencies, and ETFs.
The platform will not charge commissions for any trades and plans to register on NASDAQ in late 2021. There are more than 2100 employees currently working for Robinhood.
Fintech companies are gaining worldwide popularity. These companies offer lucrative investment opportunities for investors. If you want to invest your money in Fintech startups in 2021, choose from the top ten fintech startups on this list.