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Hot Property, Insurance , Real Estate the KPMG Fintech UK make top 10 #fintech100 100 list

Chinese online property insurer ZhongAn has topped a list of financial technology (fintech) innovation companies, leading a strong showing by Chinese firms this year amid increased funding and interest in the sector there.

The Fintech 100 list, was published on Monday [14/12/15]  under a collaboration between investment firm H2 Ventures and KPMG, was still dominated by U.S. companies, with 40 percent of the firms based in the Americas.

But there were seven Chinese firms in the list of 100, compared to just one a year earlier.

Fintech companies are shaking up banking and other industries by allowing savers and borrowers to bypass traditional lenders with smartphone apps and websites for loans, payments and all areas of financial services.

ZhongAn was founded in 2013 in Shanghai and is a joint 11venture between major firms Alibaba Group, Tencent Holdings and Ping An Insurance. Beijing-based electronics retailer Qufengi [alibaba affilate], which allows flexible payment options, ranked fourth.



Top 10 fintech firms:

1. ZhongAn (China)
2. Oscar (USA)
3. Wealthfront (USA)
4. Qufenqi (China)
5. Funding Circle (UK)
6. Kreditech (Germany)
7. Avant (USA)
8. Atom Bank (UK) (Tosca Hedge Fund investment 2014)
9. Klarna (Sweden)
10. OurCrowd (Israel)

All in all, the Fintech 100 includes 40 companies from the Americas, 20 from Europe, the Middle East and Africa, 18 from the UK and 22 from Asia and the Pacific.




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The UK is especially good at fostering new fintech firms, the report shows, as Warren 
Mead added:The good news is the UK is currently home to more emerging fintech companies on the list than anywhere else. In a fast moving sector, it will be interesting to track how many breakout over the next 12 months.

Alongside more established players like TransferWise  [sending money with real exchange rate - great forex potential for overseas property - holiday home buyers ] and Funding Circle, the UK firms selected also include a dozen growing new firms listed as “emerging stars”, which the UK has more of than any other country.

KPMG’s report has also found that fintech financing is soaring globally, jumping six-fold in the past three years alone, and estimated to hit $20bn in 2015 - a 66 per cent increase on 2014. And London is a major motor powering this growth.

Some 30,000 new tech jobs have been created in London in the past five years, and the capital’s fintech sector is enjoying the world’s fastest investment growth.

17 of Europe’s 40 unicorn-valuation startups are in the UK, and eight of these are fintech companies, the biggest sector by far.

Notable property related fintech inclusions : 

FangDD.com (China) integrates online and offline property businesses and buyers on
a single platform, allowing user friendly property transaction services. FangDD
follows a business model of pay–for–performance, catering to customers across
Viva Real (Brazil) online real estate portal that enables its users to sell, buy, rent or invest in residential and commercial properties throughout Brazil
property partner (UK) create a global stock exchange for residential property (UK)

The 100 companies have collectively raised more than $10 billion.


fintech 100 leading global fintech innovators report 2015  < download PDF

What constitutes Fintech and what is outside it.?

While the term Fintech has no official definition, according to Rainer Alt, Thomas Puschmann in the paper 'The rise of customer-oriented banking - electronic markets are paving the way for change in the financial industry,' it essentially involves significant use of technology and computing to bring about "incremental or radical / disruptive innovation development of applications, processes, products or business models in the financial services industry"

Some examples of FinTech would include: 

E-Payments -The system of e-payments have gained popularity with the ever rising popularity of the Internet. It is sometimes interchangeably known as online banking, the system involves banks and technology providers like payment gateways. E-payments have enabled real time transfer of funds from one bank account to another in a secure manner through the Internet. E-payment is one of the earliest examples of using technology in the financial sector. From booking tickets, to paying utility bills, much of our transactions take place through the e-payment route.

Algorithm-based credit underwriting - The churn started after the economic crisis of 2009, when big financial institutions were forced to relook how they determined risk associated with a particular loan. Algorithm-based credit underwriting is nothing more than letting a computer analyze the risks involved in a particular lending. As lending marketplaces become popular, algorithms being used to assess loans also gain acceptance. Compared to a human making the decision, algorithm-based underwriting is supposed to be more consistent, less subjective and also cheaper.


Real time analyses through IoT devices for insurance - If the financial sector has been slow in accepting technology, the insurance industry is the clear laggard. Things are, however, changing as in the US insurance companies are using sensors to determine the driving style of an individual for auto insurance. Similarly, Internet of Things (IoT) has meant a slew of wearable devices can now be used for life and health insurance. This will mean underwriting and premium prices will be dynamic in nature and would be based on insightful data. 

Social scoring - Social scoring is essentially using social media to assess the credit risk of an individual. Traditional sets of data like income, existing debt can only provide a part of the picture. Social media accounts can also be used to get a better picture of the risks associated with lending. New age financial technology companies are using social scoring to either complement their standard background checks or use it substantially to assess the ones with a "thin file"   or the unbanked. 

Bit Coins and Block Chain - Bit coin and the technology around it, which is block chain, is viewed by many with suspicion. However, according to me, both Bitcoin and Block Chain is one of the most significant technological advances we have made in the Fintech space. While the current manifestation of this technology may not be perfect, what it can achieve is tremendous. A form of decentralised digital money, Bitcoin, and the database technology that maintains all records, Block Chain, together can re-imagine what money would look like in future. Even the Reserve Bank of India has recently talked about the potential benefits of using Block chain technology to prevent counterfeiting. 

P2P Lending marketplaces- With the emergence of the sharing economy, a new form of lending and borrowing in the form of peer-to-peer lending marketplaces have taken shape. Connecting individual borrowers with lenders, P2P sites function as a platform that makes this marriage possible. Leveraging technology, these P2P sites helps validate the antecedents of a lender, conduct a credit risk and profiling of the borrower and then facilitate the transaction.

AI based financial planning - There is always a level of subjectivity when financial planning is done by an individual. On the other hand, there is an asymmetry in the level of information that a financial planner may have access to, which in turn can lead impair judgment. To get around the problems and shortcomings, robots or artificial intelligence (AI) have now been entrusted with financial planning. AIs effectively monitors events on a global scale and the possible repercussions it can have on stock and bond price, present and future trends and then map it against a user's financial goals. Such "robo advisors" have been widely deployed and present a thrilling use of technology in the financial space. 

As the pressure to manage massive amounts of data increases along with the ability to provide real time analysis, technology would be increasingly called upon to address many issues. Other examples of Fintech include algorithmic wealth management, Tap and Pay and cross border movement of monies among a growing list of such innovations. 

What is not FinTech 

This leads us to the question - what is not FinTech? 

Lead aggregation - Lead aggregation that involves compiling data from a number of marketing and allied activities and then trying to tap into prospective customers is not Fintech. Lead aggregation has been an old and integral part of the finance industry, used prominently by the banking and insurance segment to push their products. From credit cards to insurance products, lead generation of prospective customers has been deployed to help the sales channels. However, lead aggregation is not Fintech and just another part of the sales and marketing funnel. 

Comparison sites - As the number of financial products increase and they become increasingly complicated, a number of websites have come up that compare similar products and helps users determine the best. These sites are helpful, but they do not qualify as Fintech include Online DSA and NBFCs lending online. These are mere extensions of their main business and these activities in no way leverage technology significantly. 

Fintech is a space that is evolving rapidly and generating considerable excitement. It has the potential to get things done better, faster and enable the financial space to be more inclusive. Technology has touched every part of our lives and it makes sense it plays a deeper role in an industry that has profound impact. 




 
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