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FinTech and the Future of Finance
This document summarizes developments in financial technology (FinTech) and Stockholm's position as a leading FinTech hub. It notes that Stockholm has over 97 FinTech companies, generating over 14 billion SEK in revenue and employing over 5,800 people. Major FinTech segments in Stockholm include payments, lending, wealth management, and cryptocurrency. Emerging technologies like blockchain, peer-to-peer lending, and crowdfunding are disrupting traditional banking models. Stockholm is well-positioned to become a global FinTech leader due to its supportive environment, entrepreneurial talent, and enabling regulatory framework.
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FinTech and the Future of Finance
- 1. March 2016 Claire Ingram [email protected] MichalGromek [email protected] Nicholas Wesley James [email protected]
- 2.
- 3. If the rateof change on the outside exceeds the rate of change on the inside, the end is near.... -Jack Welch
- 4. Thx to R.Wieselfors, Ericsson for photos
- 5. Thx to R.Wieselfors, Ericsson for photos
- 6.
- 7. People • Millenials • Digitallyremoving friction • Sharing not owning • Sustainability • Global yet local • 24x7 “mobile” workforce Technology • Broadband • Smart phones • The cloud • Internet of Things • Big Data • 3D printing • Robotics/AI • VR/AR • Holography Open Source IP • Software • Hardware • Physibles Convergence of….. Finance • Microlending/microfinance • Crowdfunding/equity/P2P • Cryptocurrencies • Blockchain • Mobile money/payments • M2M payments
- 8. Uber • Launched June2010 • >330 cities in 60 countries • Limited physical assets • > USD 60 bln valuation (Ericsson – USD 30 bln) “Doing more with less” through a global platform
- 9. The Sharing Economyis enabled through peer-to-peer (P2P) transactions on multi-sided platforms (MSPs) http://sloanreview.mit.edu/article/strategic-decisions-for-multisided-platforms/
- 10. Cost to launcha tech start-up
- 11. Local Stockholm successstory: Flippin’ Burgers Money raised: SEK 36,502 / €4,000 Number of investors: 186 Date funded: September 2011 Sector: Food
- 12. Enabling local, small-scalesolutions http://travel.cnn.com/best-americana-restaurants-europe-023346
- 13. Crowdfunding Accumulation of smallinvestments in individual projects by large number of individuals (the “crowd”) via or with help of Internet and social networks (De Buysere et al., 2012) Picture: FundedByMe
- 14. What is FinTech? Technologiesfor banking and corporate finance, capital markets, financial data analytics, payments, and personal financial management - Accenture/CB Insights Finance TechnologyFinTech
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- 16. Banking is essential, butbanks are not. Bill Gates
- 17. Recent surveys ofmillennials
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- 19. Negative trust inbanks
- 20. Heavily increasing regulatoryactivity
- 21. FinTech customer segments& products 2015
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- 23. 12 top VCFinTech investments since 2007
- 24. And other bigcorporates investing too
- 28.
- 29. But in Chinaalone in 2015… http://www.crowdfundinsider.com/2016/01/79612-report-china-p2p-lending-topped-150-billion-in-2015/
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- 32. Automated investing basedon algorithms
- 33. Profits from non-mortgageretail lending, e.g., credit cards, car loans, could be reduced by 60% and revenues by 40% over next decade.
- 34. In just thepast few years in Stockholm… Company Founded Business Klarna 2005 E-commerce payment services MyLoan 2006 Loan broker Trustly 2008 Online payments iZettle 2010 Mobile payments FundedByMe 2011 Crowdfunding, crowd equity Kivra 2011 Digital mailbox Tink 2012 Personal finance Safello 2013 Cryptocurrency exchange KnCMiner 2013 Cryptocurrency mining equipment Toborrow 2013 P2P lending for companies Dreams 2013 Savings bank
- 35. Company Founding Year Newly Found Source Description Segment Inkassogram2015 x 2016 Crowdsourcing Simplifies debtor and creditor relationship Lending Lenovium 2015 x 2016 Crowdsourcing Mortgage maturity optimization service Lending Primepilot 2015 x Tobjörn AI based investing advice Wealth Management XBT Provider 2015 x 2016 Crowdsourcing XBT Provider manages Bitcoin Tracker One and Bitcoin Tracker Euro. With these instruments anyone can invest in Bitcoin as ETN:s, exchange-traded notes, from anywhere in the world Crypto Currency ZignSec 2015 x 2016 Crowdsourcing ZignSec is Scandinavia´s most modern verification platform. ZignSec help bank customers (Merchants) to verify users through a series of look-ups in real- time; Nordic eID, IP-checks, device geolocation, device usage, blacklists, credit checks, AML checks and much more. Other FinTech Zimpler 2015 x Tobjörn Mobile gaming focused payment service provider Payments Barnpengar 2014 x Industrifonden Personal finance tool for children Wealth Management Billecta 2014 x Industrifonden Billing software Other FinTech Bitrefill 2014 x Tobjörn Recharge your mobile phone with bitcoin Crypto Currency Capcito 2014 x Industrifonden Short term loans against receivables Lending Chromaway 2014 x Tobjörn Enterprise platform for coloured bitcoins Crypto Currency Co-Owning 2014 x 2016 Crowdsourcing Crowdfunding for real-estate investments Crowdfunding Consector 2014 Previous Study Personal loan comparison services Lending Cryex 2014 Previous Study Institutional financial trading platform Crypto Currency Leaseonline 2014 x NFT Ventures Online car leasing service Lending Leasify 2014 x NFT Ventures Business lease managagement system Other FinTech lendify 2014 Previous Study Loans between private individuals Lending Monetise 2014 x Industrifonden Short term loans against receivables Lending NOWO 2014 x NFT Ventures Credit card with automatic retirement savings Other FinTech Pensionera (Pensionera förmedling i Sverige AB) 2014 x Industrifonden Pension comparison and monitoring Wealth Management Pensionskraft 2014 x NFT Ventures Pension comparison and monitoring Wealth Management Pepins (Pepins Nordic AB) 2014 x Tobjörn Equity crowdfunding platform Crowdfunding Prello 2014 Previous Study mobile POS Payments Qliro AB 2014 Previous Study Online payment solution provider Payments Slipp 2014 x 2016 Crowdsourcing Accounting solutions provider Other FinTech Strawpay 2014 x Tobjörn Developing a highly scalable open trasaction protocol Crypto Currency Tessin Nordic AB 2014 x NFT Ventures Property Crowdfunding Crowdfunding TradeVenue 2014 x Industrifonden Social meeting place for savers Wealth Management
- 36. Stockholm #2 FinTechcity after London in EU 2010-2014 investment ● $532 Mln 2014 investment ● $266 Mln ($141 Mln VC) 2015 investment ● $96.4 Mln VC Top 2014 Investments in Stockholm FinTech Companies (USD Mln) Klarna $125 iZettle $55 Trustly 29 Bima Mobile $22 KNC Miner $14 http://www.slideshare.net/eteigland/stockholm-49722748
- 37. 1950 1960 19701980 1990 2000 2010 1959, Bankgirot founded 1985, Swedish financial and credit markets deregulated 1968, World’s first online ATM in Sweden First wave of electronic trading software companies emerges 2003, First BankID issued in Sweden 1990s, Sweden invests in Internet infrastructure, today country with 3rd highest Internet penetration 2010, iZettle founded 2010, Neonet $160M exit 2014, iZettle raises $55M 2014, Klarna raises $125M in PE 1967, First ATM installed in Sweden 1984, Optionsmäklarna (OM) opens in Stockholm, Sweden’s first stock option market, electronic trading introduced 2012, TriOptima, $160M exit 2005, Klarna founded 1998, Merger between Stockholm’s Stock Exchange and OM Stockholm 2007, NASDAQ acquires OMX Group Unicorns such as Skype, King, Spotify and Mojang founded 2014, FinTech Funding in Stockholm Explodes Long history of “FinTech” in Stockholm http://www.slideshare.net/eteigland/stockholm-49722748
- 39. Forming partnerships… + …to rethinkand encourage saving among millenials +
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- 44. FinTech Companies inStockholm by Segment Segment 2009 2010 2011 2012 2013 2014 2015 Transfers 1 1 1 2 2 2 2 Crowdfunding 0 1 2 3 3 6 6 Crypto Currency 0 0 0 3 5 9 10 Wealth Management 2 2 2 4 5 9 10 Other FinTech 3 6 8 9 10 14 15 Trading and Banking Tech 14 15 15 15 15 15 15 Lending 5 6 6 8 9 14 16 Payments 10 12 16 18 20 22 23 Total 35 43 50 62 69 91 97 No. of FinTech companies in Stockholm per Year 0 10 20 30 40 50 60 70 80 90 100 2015201420132012201120102009 #ofCompanies Payments Lending Trading and Banking Tech Other FinTech Wealth Management Crypto Currency Crowdfunding Transfers
- 45. Stockholm FinTech Revenueand Employee #s 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 0 2 4 6 8 10 12 14 16 2010 2011 2012 2013 2014 2015 (est) Employees Revenue(bnSEK) Revenue Employees 2010 2011 2012 2013 2014 2015 (est) Revenue (bn SEK) 7.5 7.8 9.0 12.0 13.2 14.3 Employees 2,889 3,210 4,255 4,710 5,261 5,812
- 46. In 2015 VCsinvested USD 96 mln in Stockholm FinTech Companies Company Segment 2015 Investment (m USD) iZettle Payments 66.6 KNC Miner Crypto Currency 15.0 Cryex Crypto Currency 10.0 Tessin Crowdfunding 1.8 Mr Shoe Box Other FinTech 0.7 Capcito Lending 0.6 Pensionskraft Wealth Management 0.6 Fidesmo Crypto Currency 0.5 TradeVenue Wealth Management 0.5 Safello Crypto Currency 0.1 96.4 141.0 14.0 41.4 181.4 11.1 0 50 100 150 200 201520142013201220112010 mUSD
- 47.
- 48. Within 6 years: Challengingthe fiat money system? Bitcoin – An emergent phenomenon • Open source project on SourceForge in Jan 2009 • Original source code by “Satoshi Nakamoto” – pseudonym? • Developed by self-organizing community of thousands of strangers across globe • Approx USD 6.3 bln market cap and approx 180,000 daily transactions volume 1 BTC = USD 413 (March 2016) Teigland, Yetis, Larsson 2013 http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2263707
- 49. What is acryptocurrency? Digital Decentralized, peer-to-peer (P2P), i.e., no central, third party Uses cryptography to validate/secure transactions Also uses cryptography to generate currency itself Non-technical explanation of Bitcoin − https://www.youtube.com/watch?v=t5JGQXCTe3c
- 50. Institutions Emergent Collective vs E.g., CentralBank ~ Long-standing financial institutions and regulations E.g., Bitcoin Community ~ Emergent collective of users across globe connected through internet Teigland, Yetis, Larsson 2013
- 51. Screenclip from: HowBitcoin Works under the hood, by “Curious Inventor” Bitcoin: one application of the block chain Block chain • Shared digital ledger anyone can access • Run by all participants • All transactions logged and transparent • Chronology and integrity enforced by cryptography
- 55. Betting on theBlockchain - together 42 banks and counting… Goldman Sachs, JPMorgan, Credit Suisse, Barclays, Commonwealth Bank of Australia, State Street, RBS, BBVA, UBS, Nordea, SEB, + …… +
- 57. IBM + Samsungon blockchain
- 58.
- 59. Benefits of blockchaintechnology Core concept is very powerful for financial services − Lower costs through shared infrastructure − Faster settlement that leads to lower capital and liquidity needs − Increased transparency, especially with cross border payments − Perfect record-keeping − Greater security through cryptography, transparency Citi Research, Jan 2016
- 61. Issuing private equityand public shares
- 62. Enablers of a“true” Sharing Economy? Blockchains Sharing/ Collaborative Economy IoT/sensors P2P/M2M micropayments Big data
- 63. Enabling smart contracts Imaginea blockchain-based script that is activated when two parties send bitcoins to an escrow Bitcoin account controlled by the script, and which will release the bitcoins in the future to whoever wins a bet on the average level of rainfall over a certain period. This smart-contract is programmed to read data from weather agencies, and after a set amount of time releases the bitcoins from the escrow, sending it to a farmer who requires protection against low rainfall. This is a blockchain-based weather derivatives contract. -Brett Scott
- 64.
- 65. Some FinTech challenges Regulation − How to avoid stifling innovation? Privacy − Ensuring integrity of data? Security − Preventing security breaches/hacking Untested − In periods of high interest rates, increased risk, and reduced investment
- 66. A reversal ofearly “onerous” regulations Italy’s recent changes Expand definition of ”professional investor” Allows a limited amount of public advertising Making transactions completely online
- 67. State of regulationsin Sweden Tax considerations VAT due on reward- based crowdfunding money raised Tax deductions on private investments under 50,000 kr per year Jurisdictional problems Much of FinTech is consumer-facing Problem: who oversees? Finansinspektionen or Konsumentverket?
- 68. In Europe, PSD2actually mandates “opening up”
- 69. Opening up innovation… CitigroupCapital One BBVA Compass Silicon Valley Bank Bank of America
- 70. Democratizing innovation through accessto capital?
- 71. “Made in Africa”3D printer (Togo) Winner of International Space Apps Challenge http://www.engineering.com/3DPrinting/3DPrintingArticles/ArticleID/5712/E-Waste-3D-Printer-to-Mars.aspx
- 72.
- 73. FinTech – Anincreasingly crowded space • Growing number of entrepreneurs with experience from established finance industry • Increasing number of FinTech incubators • Collaboration among established banks • Open innovation through open APIs • Other big non-banking entrants
- 74.
- 75. Previously….. From Netscape IPOin 1995 to PayPal acquisition by eBay in 2002, more than 450 attackers – new digital currencies, wallets, networks, etc. challenged incumbents McKinsey, 2015 Fewer than five survive as stand- alone entities today.
- 76. The future isalready here, it’s just not very evenly distributed. - William Gibson
- 77. Robin Teigland [email protected] @robinteigland Claire Ingram [email protected] MichalGromek [email protected] Nicholas Wesley James [email protected]
- 78. Robin Teigland [email protected] www.slideshare.net/eteigland www.funnovation.se @robin.teigland If youlove knowledge, set it free… If you like this presentation and would like to contribute to our research, we accept bitcoins: 14hs4JbnQLXE87GGzu84uXGaspmxmnLpwC. Thank you!!!!!