Changing the Face of FinTech in 2017

Think the FinTech frenzy is over? Think again!  In 2015 FinTech investments grew by 75% (up to $22.3 billion worldwide) and 2016 showed no signs of slowing, with 2017 just kicking off, investment in innovation is expected to continue to grow at a rapid pace. In fact, the market is seeing more banks and traditional financial institutions shift, increasing acceptance of FinTech, opening the door to startup innovations and new technologies.

Institutions Go From Hesitation to Acceptance

A drastic change in the FinTech world was needed, and the question was – where would the change come from.

The rise of digital banking as a whole, and specifically mobile banking and peer-to-peer banking, drastically altered the financial world, coming in first as a major disruption.

Today, more and more big banks recognize that they have to change their strategy if they want to stay relevant or risk losing market-share to smaller banks that are adjusting with the times.


Understandably, many of these institutions have recognized that the quickest way to change their strategy is through incorporation of a new technology into an existing infrastructure. Whether through a PoC, traditional acquisition or merger, FinTech incorporation into traditional banking is on the rise and signals a drastic shift in the way banking institutions see the future of financial transaction.  To mark this shift, companies are setting aside large chunks of change to buy out, merge and develop new technologies.  Already in Q1 of 2016, FinTech investment increased
by 67% up to $5.3 Million and the expectation is that FinTech investment will continue to rise in the upcoming years.  

Startups Changing the Financial Outlook

“Money only holds value if there is trust, and if you want to make changes, you need to be within the banking system. You cannot be outside of the system.” – Suresh Ramamurthi

The FinTech revolution isn’t just changing the way banks view financial innovation, but it’s changing the way startups view banks.

In the past, the trend in FinTech startups was to disrupt the market and radically alter the way transactions were made in a virtual environment. Companies such as BitCoin, the first open-sourced payment network, and LendingClub, which offered a revolutionary peer-to-peer lending system, signaled a potential death to traditional banking.  

The entrance of non-financial enterprises into the financial sector, such as the creation of Google Wallet (which evolved into Android Pay), Samsung Pay and Apple Pay, further signaled that perhaps traditional banks were on the decline and would soon be a thing of the past.  

The shift in the willingness of traditional financial institutions to accept innovation rather than reject it has caused many startups to change the way they view banks and think about innovations in finance. Today, more and more startups are viewing banks as partners, creating collaborative technologies that can be easily integrated into existing institutions rather than try to kill the banks with disruptive technology.  The result: a win-win situation for startups, banks, and consumers.

Old Institutions – New Ideas  

Collaborative FinTech ventures saw an increase in funding since late 2015, climbing to 44% of all FinTech investment worldwide. In the U.S alone, collaborative funding increased from 40% to 60%, showing the largest willingness from financial institutions to work alongside startups to improve the financial world for consumers.

Vantiv, originally Fifth Third Processing Solutions, the Electronic Fund Transfer solution of Fifth Third Bank, has a long history of acquiring startups with collaborative technologies. Just a few weeks ago Vantiv announced that they will be strengthening their technological stronghold with acquisition of Moneris Inc. for $425 million.


While Vantiv shells out the big bucks,
Goldman Sachs saw a diamond in the rough with Honest Dollar, acquiring the digital retirement platform earlier in the year. While the purchase was made for an undisclosed sum, Crunchbase indicated that Honest Dollar raised $3 million in VC funding. The acquisition of Honest Dollar by Goldman Sachs indicates that not only are smaller startups being noticed, but it further shows that there is a need for technology that enhances customer experience for institutions rather than disrupts the market altogether.

Perhaps the most drastic example of old institutions meeting new technology is found in CBW bank. Suresh Ramamurthi, a former Google-er, bought the 124-year-old Kansas bank in 2009 and brought with him the mentality of innovation and technological acceptance. After recognizing that financial innovation needs to be backed by a traditional institution, Ramamurthi led the way in technological collaboration, building Yantra Financial Processing to offer a system that retail institutions didn’t yet have, and nurturing collaboration with innovative FinTech startups, showing that banking can evolve alongside technology.