The right kind of FinTech development is anchored in partnership

Wide support for the FinTech industry’s growth
Xconomy discussed how startups are making their mark on New York, turning the city into more than just a financial hub. Jenny Fielding, commenting on the new Barclays Accelerator program that helps FinTech startups raise capital and grow, said the program will help connect the city’s finance industry with its tech scene.

“All the money’s here, all the banks are here,” noted Fielding, according to the news source. “A lot of people in financial services are catching the startup bug, and realize they don’t have to work at the big firms.”

The Accelerator program, which started in London, welcomes FinTech innovations for B2B as well as B2C products. Common areas being tackled by program participants are data analytics, trading platforms, cybersecurity, machine learning, artificial intelligence, natural language processing, cryptocurrency, payments, and lending. Jay Bhattacharya, CEO of New York-based startup Zipmark, explained that his experience shows that financial markets no longer seem to be defined and run by only a handful of banks, as they were a couple decades ago. For Bhattacharya, while the first generation of FinTech companies, such as PayPal, catered to a broader market, the current and subsequent generations will operate in more niche areas and take on issues of small scope but greater complexity.

“The democratization of systems in financial services has helped,” Bhattacharya added.

“The next generation of FinTech will operate in niche areas and take on issues of greater complexity.”

Solving B2C and B2B needs through financial technology
TechCrunch recently discussed the success of NerdWallet, a website that provides users with financial advice on a wide range of subjects. The company had launched six years ago with a mere $800 in initial capital. In sharp contrast, company co-founder Tim Chen raised $64 million in a round of outside financing this year alone, speaking to the company’s lightning-fast growth. As validation of the value it provides to its users, NerdWallet saw 30 million people visit its site last year. The site features information on health care, mortgages, banking, credit cards, wealth management, loans, etc.

“To be honest, I want to cover every substantial financial decision that anyone can make in their life,” explained Chen when asked what drove his company’s development. NerdWallet’s ability to pinpoint and address the types of challenges people face in their personal finances has ensured its trajectory of success.

Similarly, on the institutional side, some FinTech companies work to specifically improve operational efficiency for asset management firms. Wasmer, Schroeder & Company, which specializes in fixed income separate account portfolio management for high-net-worth individuals, wealth management groups and institutions, chose to partner with fintech company Black Mountain Systems to help address its immediate operational challenges.

Marty Wasmer, CEO & founder of the company, wanted his company to overcome the types of business challenges that naturally arise when managing over 2000 individual accounts. He was looking for technology that would enable their business to grow quickly, while enhancing processes and bridging gaps between their front and back offices. To accomplish these goals, Wasmer sought a more robust portfolio compliance capability, streamlined trade order management process and an effective trade allocation tool. Black Mountain Systems was able to deliver all this in one sophisticated platform tailored to Wasmer, Schroeder & company’s specifications.

“The Everest product that we developed in partnership with Black Mountain Systems went a long way in terms of scaling our business and to a large degree, made us rethink how we
ran our business and how we ran our portfolio management systems,” said Wasmer. “We weren’t looking for scale for scale’s sake. We were looking for the efficiency that we could obtain and we were looking for a better deliverable for our clients.”

FinTech has helped New York become a technology hub. FinTech companies continue to attract significant investment.

The FinTech ecosystem in evolution
The many examples of FinTech companies creating value for both individuals and businesses are the reasons why the sector continues to attract global investments. According to last year’s report from Accenture, global investment in FinTech ventures tripled from $4.05 billion in 2013 to $12.2 billion in 2014 and is projected to rise in 2015, reported VentureBeat.

FinTech companies are not regulated to the same degree as the finance industry – allowing them flexibility in implementing their products and services. VentureBeat also advised that eager investors should focus on FinTech companies that collaborate with financial institutions, form partnerships, and fulfill market demands together. By leveraging networking technologies, startups can improve certain aspects of the financial value chain where traditional banks fall short. Additionally, when financial institutions partner with FinTech companies, they can improve their data infrastructure and manage customer accounts more efficiently. Combining the right attitude and infrastructure, financial institutions and FinTech startups can create mutually enabled efficiency. Vineet Malhotra, Managing Director at Canadian Imperial Bank of Commerce, pointed to one sign he has seen as an indication of this transformative movement.

“When you see large U.S. banks working with Apple to bring a product to market, you see that we can all play a role in this ecosystem,” said Malhotra, according to the news source.