Lessons in innovation from key FinTech trends and successes
Creating Strategic Value through Financial Technology explores the growing Financial Technology (FinTech) industry to provide insight on how traditional financial institutions and FinTech companies can boost innovation and enhance valuation in a complex regulatory environment. In plumbing the depth and breadth of several niches within in the FinTech sector, author Jay Wilson uncovers key themes that have contributed to the industry's success; in this book, he maps them together to provide useful guideposts for investors, entrepreneurs, and traditional institutions looking to facilitate growth as technology and financial services collide. With an expert's perspective on FinTech history and outlook, certain trends and examples of value-enhancing strategies stand out. FinTech niches covered include: payments, crowdfunding, alternative/marketplace lending, the blockchain, and technology solutions in the context of banking, insurance, and investment companies.
There is no denying the growing importance of technology in the financial services industry, and the FinTech sector offers valuable solutions for a diverse array of financial services providers and their customers. This book guides you through several niches of the FinTech sector, and highlights the most important takeaways from recent endeavors.
- Navigate the financial technology sector
- Enhance customer and product offerings
- Improve efficiency and cost structure
- Enhance profitability and company valuation from the intersection of technology and finance
Innovation and customer preference is a key driver of FinTech's growth. Customers are demanding better value and convenience, and the organizations that provide it are reaping the rewards of growth. As financial regulations grow more and more complex, and customers are presented with more and more options, it is becoming imperative for traditional institutions to modernize processes and carve out a place in the future of financial services. Creating Strategic Value through Financial Technology provides a handbook for navigating that space, with practical guidance on how FinTech companies and traditional financial institutions can enhance profitability and valuation from the trends.
Preface xi
Acknowledgments xv
SECTION ONE
CHAPTER 1 What Is Financial Technology? 3
Technology’s Impact on Financial Services 3
What Is FinTech and Who Are the Players? 5
Why the Hype for FinTech? 10
Why Is FinTech Potentially So Important to Society? 12
Recent Trends and Market Conditions for the FinTech
Industry 14
Conclusion 18
Notes 19
CHAPTER 2 Community Banks and FinTech 21
Is FinTech a Threat or an Opportunity for Community Banks? 21
FinTech’s Potential Impact on Bank Valuation 29
How Community Banks Can Help FinTech Companies 31
Conclusion 32
Notes 33
CHAPTER 3 The Historical Context for FinTech 35
Introduction 35
FinTech History 35
Visa and MasterCard: The Largest IPOs in FinTech History 40
Core Vendors 43
Notes 50
SECTION TWO
CHAPTER 4 State of Community Banks Embracing FinTech Today 53
Introduction 53
Overview of U.S. Community Bank Industry Trends 53
Banks and FinTech Increasingly Intersect 56
Serving More Customers Digitally 56
Evolving Regulatory Oversight of FinTech 61
Conclusion 66
Notes 67
CHAPTER 5 The Alternative Lending Niche 70
The Mortgage Market 70
The Consumer Lending Market 72
Government Regulation of Alternative Lending Platforms 78
Conclusion 79
Notes 80
CHAPTER 6 The Payments Niche 82
Trends to Watch 82
Digital Currencies and Blockchain Technology 91
Conclusion 99
Notes 100
CHAPTER 7 The Wealth Management Niche 104
Introduction 104
The Evolution of the Online Brokerage Industry 106
The Rise of Robo-Advisors 108
Conclusion 116
Notes 118
CHAPTER 8 InsurTech and the Future of Insurance 120
Introduction to InsurTech 121
Technology Trends in Insurance 123
Conclusion 129
Notes 129
SECTION THREE
CHAPTER 9 Partnering with a FinTech Company 133
Introduction 133
Conclusion 154
Notes 155
CHAPTER 10 Early Stage FinTech Valuation Issues 156
Introduction 156
Why You Should Have a Valuation Performed 157
Valuation Considerations for FinTech Companies 160
What about Preferences and FinTech Valuations? 172
Special Issues: Valuations for Other Stakeholders 173
Conclusion 183
Notes 183
CHAPTER 11 Acquiring a FinTech Company 185
Introduction 185
Recent Trends in FinTech M&A Activity 187
Metrics to Analyze FinTech Transactions 192
Accounting Considerations and Goodwill Creation in FinTech Deals 202
Special Issues to Consider with FinTech M&A 218
Conclusion 224
Notes 224
CHAPTER 12 Liquidity Options Beyond a Sale 227
Introduction 227
Liquidity Options 228
Is Your Buy–Sell Agreement Solidly Built? 234
Conclusion 240
Notes 240
CHAPTER 13 Is There a Bubble Forming in FinTech? 242
Introduction 242
Factors Leading to a Bubble? 243
Signs That a Bubble May Be Forming in FinTech 246
Case Study of a FinTech Failure 246
Conclusion 251
Notes 252
Index 253
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