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www.frontline.vc
June 2016
Sept - 2017
European FinTech is on track for a record year
€500b
€1075b
€1650b
€2225b
€2800b
2013 2014 2015 2016 2017
£2,637m
£1,902m
...
As EU FinTechs raise fresh funding
Private Equity
$225m
Growth
€110m
Series B
$20m
Series C
$40m
Series D
£20m
Series A
$1...
And big winners emerge throughout Europe
CBinsights Europe FinTech Trends 2017
$598m
$373m
$281m
$266m
$193m
$146m
Funding...
5
Intro: Key topics covered in this deck
Online Lending
Banks & Neo-Banks
Banking APIs
Asset Management
Foreign Exchange
P...
Challenger banks continue to gain market share
6
Low NPS (a UK average of +2) encourage
startups in the banking space
250k...
Online lending continues to grow, despite fears
7
2Q 15 3Q 15 4Q 15 1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17
£8.3b
£7.5b
£6.4b
...
Regulation enables API centric banking
8
Railsbank
Global banking
access
Banking OSBanking APIsFully licensed
bank of banks
Asset management tech companies pursue partnerships
9
Robo-advisors pursue partnerships as scale is hard to achieve
Integr...
Competition heats up in foreign exchange
$185m
$116m
$119m
$100m
$24m $19m
$10m
Many well funded players
Revolut offers fr...
And big exits take place in the payments space
11
Acquired for £9.1
Payments continue a wave of tremendous consolidation
a...
12
Online Lending
13
LendingClub, stumbled and yet to recover
LendingClub Statistics
1.5 years after CEO was ousted for
inflating loan origin...
1Q
15
2Q
15
3Q
15
4Q
15
1Q
16
2Q
16
3Q
16
4Q
16
1Q
17
2Q
17
$464m
$573m
$631m
$612m
$589m
$569m
$556m
$482m
$419m$416m
14
...
15
US consumer online lending collapsed in 2016
LendingClub Statistics
Valuation drops from $1.9b
to $500m as origination
...
However, US Online lending overall is growing since 2011
17
So who is winning? Goldman Sachs, SoFi
LendingClub Statistics
https://www.ft.com/content/50c1faf6-6a3b-11e6-a0b1-d87a9f...
The UK is experiencing tremendous growth as well
18
3Q 15 4Q 15 1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17
£8.3b
£7.5b
£6.4b
£5.7...
EU market leaders maintain market position (unlike in the US)
19
Jun 2017
Raise ₤32m to pursue
banking license
Jan 2017
$1...
20
While some smaller players disappear
Lendico and Zencap displaced by auxmoney in Germany
Lendico, once valued at €140m,...
21
Consumer debt per capita smaller in EU than in USA
1
Consumer Creidt & Payment Statistics, Philadelphia Federal Reserve...
Online lenders have reduced operating costs
22
Savings stemming from lack of
branches and more efficient collections
And significantly lower capital requirements
23The future of finance, rise of the new shadow bank. Goldman Sachs Research
Online lending to grow into trillion $ business
24
Projected Marketplace Lending Deals 2020
0
35
70
105
140
2012 2013 2014...
25
Banks & Neo-Banks
Neo banks offer a banking like service, but (often) do not
offer the same guarantees and are not regu...
26
Neo-banks are beginning to look like banks
Non-banks Banks
As neo-banks grow larger, they realise the quickest
way to p...
27
While low NPS continues to drive growth
Challenger Banks in Europe, Frontline Ventures
CHALLENGERSINCUMBENTS
88
80
73
6...
• It is cheaper, easier and faster than
ever to engage in banking activities
• Existing low customer satisfaction
creates ...
29
Customers benefit from challenger efficiencies
switched from their bank in the past 12 months2
would consider banking wit...
30
Although N26 scales back on some free perks
MoneyConf, Madrid, Panel Discussion “How can banking become a level playing...
Announced £50m Series B financing round at a
valuation of £300m
Acquired 700k customers since launch 3 years ago
Offer free...
32
Challengers status quo
Atom - focused on
savers, no public
customer numbers
Expands to Europe
after raising $10m
Series...
33
Banking APIs
34Customer Loyalty in Banking, Earnix New Survey Finds That Open Banking is a Game Changer for Millennials
(Consumer
banki...
35Customer Loyalty in Banking, Earnix New Survey Finds That Open Banking is a Game Changer for Millennials
Open use of dat...
v
v
36
A number of regional champions have emerged
37Yodlee S-1
FOUNDED: 1999
ACQUIRED: 2015
Founded: 1999
IPO: 2014, 1999
MRKT CAP (IPO): $340m
Acquired 2015: $590m
ORGANIZ...
38
Asset Management
Robo-advisor assets under management are still small
39
Betterments AUM has grown from $3bn since Jan 2016 to
$8.5b in May...
Growth slowing in recent years
40
“Stand-alone firms will need $16b to $40b
of net assets to break even. Moreover,
[Morning...
Companies acquired for tech
41The Pulse of FinTech Q1 2016 Review, CBInsights
Banks move into the robo-advisor space
42The Pulse of FinTech Q1 2016 Review, CBInsights1UK banks set to launch robo-advis...
v
A challenging propositions for VCs
43The Pulse of FinTech Q1 2016 Review, CBInsights1UK banks set to launch robo-advisor...
• Goldman Sachs Asset
Management (GSAM) has 1trln
in AUM.
• Betterment and WealthFront
have a combined $20b,
suggesting tr...
₤15m Series B
45
Pensions largely untapped wealthhtech opportunity
Undisclosed seed
Automatic enrolment
+
Existing pension...
46
Foreign Exchange
47
The FX market remains highly fragmented
Arma Partners FinTech Update Q1 2017
48
With a number of well funded players
$185m
$116m
$119m
$100m
$24m $19m
$10m
Arma Partners FinTech Update Q1 2017
49
Taking share from incumbents
2Q 2017 Earnings Presentation
Western Union sees declines in offline business
50
Payments
51
Acquired
for £9.1
Visa Europe
acquired for
€16.5b
Acquired
for £700m
Last round
valuation
$2.3b
2500 FTE
Acquired for
£...
52
Strategic investment
from VISA
Plans to expand to
consumer lending
Strategic investment
in LendUp
Payment companies ent...
53
Paypal moves closer to point of sale
Paypal launches credit card as
Apple, Samsung and Android
make progress in offline ...
54
Out of 300m customers, 33m have
used amazon pay in 170 countries
Adding 1m customers per month
Over 50% are prime custo...
€500b
€675b
€850b
€1025b
€1200b
2012 2013 2014 2015 2016
£1,124m
£981m
£863m
£800m
£717m
55
2012 2013 2014 2015 2016
£345m...
56
Insurtech
2013 2014 2015 2016 2017
$88m
$129m
$13m$1m$13m
57
European insurtech accelerates from low base
6
11
23
30
39
DEAL #
FUNDI...
58
A selection of new funding announcements so far in 2017
$10m Seed ₤2.3m Seed €2m Seed
€1.6m Seed ₤5m Series A €10m Seed...
59
Cybersecurity is one of most promising areas for insurtech
“Cyber crime costs the global
economy more than $400 billion...
Some interesting European Cybersec startups
Eliminates need for
passwords
Real-time cyber
threat identification
Stealth mo...
61
Incumbent Response
Startups build on top of bank systems and are looking for partners
62
Startups partner with banks
Banks are partnering wit...
63
US Based, 100k retail customers
$15m funds raised
Acquired for $117m
UK, Pre-launch
Banking license
$292m funds raised
...
64
Case Study: Santander Bank
Agility
Risk Taking
Mindset
Customer Scale
Products
Infrastructure
Brand
Startups + Banks = ...
65Customer Loyalty in Retail Banking
Santander has simplified offerings, gone digital
Santander improves banking offering
66
Conclusions
Predictions for 2017-2018
67
Zopa or Funding
Circle finally go public
EU FinTech will see
its first major
security breach
20...
Predictions for 2017-2018
68
Consumer FinTechs
without strong organic
growth struggle
Challengers will
explore launching
c...
69
Twitter Medium Quora Twitter Medium
70
Appendix
71
Expense management in 2017
Raises $2.2m in
Seed Funding
Raises $3.2 in
2nd Seed
Raises $11m
Series A
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European FinTech Trends 2017

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Published on

A Frontline Ventures x DN Capital collaboration 

Online Lending
Banks & Neo-Banks
Banking APIs
Asset Management
Foreign Exchange
Payments
Insurtech

2017 has been a sensational year for European FinTech. 

The £9.1b acquisition of WorldPay, $100m Series F of Funding Circle, record VC investment, record lending volumes, millions of users joining challenger banks — while Europe undergoes a massive regulatory overhaul, make FinTech arguably the most exciting sector in startups and venture capital.

In this 70-slide presentation you will find some info that may surprise you:

The pace of online lending in the UK over the past 2 years has increased 2.5x from £3.1b to £8.3 in 2Q 2017.

On average UK banks have a shockingly low NPS of +2, including the UKs largest bank (by market cap) at -24.

Robo-advisors may find themselves in a tough spot as 4/5 big banks plan on launching a robo-advisor service. 

European InsurTech practically didn’t exist 3 years ago, now accounts for roughly 10% of total FinTech funding. 

A big thank you to Piotr Pisarz at DN Capital and to Sophie Winwood at Innovate Finance for making this deck happen.

Frontline Ventures is a seed stage venture capital fund focused on B2B and enterprise software. If you are building the next world beating B2B startup contact thomas@frontline.vc.

Published in: Technology
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European FinTech Trends 2017

  1. 1. www.frontline.vc June 2016 Sept - 2017
  2. 2. European FinTech is on track for a record year €500b €1075b €1650b €2225b €2800b 2013 2014 2015 2016 2017 £2,637m £1,902m £2,160m £1,415m £924m 2013 2014 2015 2016 2017 136 193 284 375 466 DEAL # FUNDING $m £4,096m (FULL YEAR RUN RATE) CBinsights Europe FinTech Trends 2017
  3. 3. As EU FinTechs raise fresh funding Private Equity $225m Growth €110m Series B $20m Series C $40m Series D £20m Series A $11m Series A $10m Series D £20m Series B €21m Series D £20m Series E £32m Private Equity €30m Series C £20m Series A €10m Venture €19m Growth $40m Series F $100m Series A $10m Series C €17m BIMA Series C €10m Series B £15m Crunchbase Pro
  4. 4. And big winners emerge throughout Europe CBinsights Europe FinTech Trends 2017 $598m $373m $281m $266m $193m $146m Funding $2.5b $1b $500m2 $2.3b $500m - Valuation HQ 18% 5% 7% 9% 16% 44% UK Germany Sweden Ireland Switzerland Other EU FinTech Investment by Country
  5. 5. 5 Intro: Key topics covered in this deck Online Lending Banks & Neo-Banks Banking APIs Asset Management Foreign Exchange Payments Insurtech
  6. 6. Challenger banks continue to gain market share 6 Low NPS (a UK average of +2) encourage startups in the banking space 250k 500k 1.1m 30m # Users 6259 50 35 27 52 -6-8-10-17-22-24-41-42 AVERAGE UKBANK Challengers still a long way from incumbent user base Challenger Banks in Europe, Frontline Ventures
  7. 7. Online lending continues to grow, despite fears 7 2Q 15 3Q 15 4Q 15 1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17 £8.3b £7.5b £6.4b £5.7b£5.8b £5.1b £4.3b £3.7b £3.1b Lending reported by the the P2PFA Funding Circle Statistcs
  8. 8. Regulation enables API centric banking 8 Railsbank Global banking access Banking OSBanking APIsFully licensed bank of banks
  9. 9. Asset management tech companies pursue partnerships 9 Robo-advisors pursue partnerships as scale is hard to achieve Integration Strategic investment
  10. 10. Competition heats up in foreign exchange $185m $116m $119m $100m $24m $19m $10m Many well funded players Revolut offers free FX (subject to £5k per month fair usage)
  11. 11. And big exits take place in the payments space 11 Acquired for £9.1 Payments continue a wave of tremendous consolidation after the acquisition of £16b Visa Europe in 2016 Acq offer for $3.9b Acquired for £700m Acquired for $1.5b
  12. 12. 12 Online Lending
  13. 13. 13 LendingClub, stumbled and yet to recover LendingClub Statistics 1.5 years after CEO was ousted for inflating loan originations, LendingClub is yet to recover Stock is down 75% since IPO, ± unchanged for the past year
  14. 14. 1Q 15 2Q 15 3Q 15 4Q 15 1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17 $464m $573m $631m $612m $589m $569m $556m $482m $419m$416m 14 SMB focused OnDeck also experienced an originations slump LendingClub Statistics OnDeck originations experience slump in 2017 Stock is down 75% since IPO, ± unchanged for the past year
  15. 15. 15 US consumer online lending collapsed in 2016 LendingClub Statistics Valuation drops from $1.9b to $500m as origination volumes fall 45% US online lending platforms suffer fall in volumes US Consumer Loans by Online Lenders 2013 2014 2015 2016
  16. 16. However, US Online lending overall is growing since 2011
  17. 17. 17 So who is winning? Goldman Sachs, SoFi LendingClub Statistics https://www.ft.com/content/50c1faf6-6a3b-11e6-a0b1-d87a9fea034f Time to €1b in loan originations 8 months 14 months 28 months 65 months 98 months
  18. 18. The UK is experiencing tremendous growth as well 18 3Q 15 4Q 15 1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17 £8.3b £7.5b £6.4b £5.7b£5.8b £5.1b £4.3b £3.7b Lending reported by the the P2PFA Funding Circle Statistcs http://p2pfa.info/p2pfa-publishes-second-quarter-lending-datahttp://p2pfa.info/peer-to-peer-lending-data-for-second-quarter-2016
  19. 19. EU market leaders maintain market position (unlike in the US) 19 Jun 2017 Raise ₤32m to pursue banking license Jan 2017 $100m raise at $1b valuation Competitors emerge, raising £50m+ in funding in the past 12 months ₤9m Series B ₤2.5m Seed ₤21m Series C €5.5m Seed
  20. 20. 20 While some smaller players disappear Lendico and Zencap displaced by auxmoney in Germany Lendico, once valued at €140m, likely acquired for a nominal sum by institutional loan investor Zencap acquired for an undisclosed amount, recently reported poor loan performance, roughly breakeven across the life of the platform Rocket Internet Sells Stake in Lendico Startup Funding Circle buys German startup Zencap from Rocket Internet for European expansion plans
  21. 21. 21 Consumer debt per capita smaller in EU than in USA 1 Consumer Creidt & Payment Statistics, Philadelphia Federal Reserve, 2 Irish Central Bank, Household Credit Report 2H 2015. 3 The Money Charity, UK Lending Statistcs 4 New York Fed: Quarterly Report on Household Debt and Credit. Consumer debt is ex-mortgages $10,700 €3,500 £2,850 The average consumer debt per capita Refinancing is the #1 use case for online lending
  22. 22. Online lenders have reduced operating costs 22 Savings stemming from lack of branches and more efficient collections
  23. 23. And significantly lower capital requirements 23The future of finance, rise of the new shadow bank. Goldman Sachs Research
  24. 24. Online lending to grow into trillion $ business 24 Projected Marketplace Lending Deals 2020 0 35 70 105 140 2012 2013 2014 2015 2016 China Origination Volume United Kingdom Origination Volume United States Origination Volume 300 250 200 150 100 50 BillionsofUSD 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 YoY Growth in 2014: 167% YoY Growth in 2015: 200%+ Global Marketplace Lending: Disruptive Innovation in Financials, Morgan Stanley.Global Crowdfunding Market to Reach $34b in 2015, Mass Solution • Morgan Stanely forecasts global originations will reach $300b • This would suggest $1trln in loans outstanding in 2020 • Half of this growth has come from china, where there has been massive fraud • Banks will acquire or build similar platforms
  25. 25. 25 Banks & Neo-Banks Neo banks offer a banking like service, but (often) do not offer the same guarantees and are not regulated as banks
  26. 26. 26 Neo-banks are beginning to look like banks Non-banks Banks As neo-banks grow larger, they realise the quickest way to profitability is to become banks New licenses! “…You get a license to defy the laws of gravity…government guarantees, and ability to increase leverage…it is a license to print money.” CEO, Atom Bank Challenger Banks in Europe, Frontline Ventures
  27. 27. 27 While low NPS continues to drive growth Challenger Banks in Europe, Frontline Ventures CHALLENGERSINCUMBENTS 88 80 73 6259 50 35 2827 221917 52 -6-8-10-17-22-24-41-42 AVERAGE UKBANK Net promoter score is the leading cause of bank switching
  28. 28. • It is cheaper, easier and faster than ever to engage in banking activities • Existing low customer satisfaction creates an incentive to try new banks • Bank partnerships (often) extend the same deposit guarantees for customers • In the UK a number of ventures capital backed banks launch on prepaid cards • Easier on-boarding 28 And a perfect storm emerges for incumbents Digital challenger banks by total disclosed funding (€m) MoneyConf, Madrid, Panel Discussion “How can banking become a level playing field” Atom Revolut Tandem Starling N26 Monzo Tide Monese Osper Ffrees Pockit 0 75 150 225 300 $3.5m $8.5m $11m $16m $16m $45m $52m $70m $77m $86m $268m Challenger Banks in Europe, Frontline Ventures
  29. 29. 29 Customers benefit from challenger efficiencies switched from their bank in the past 12 months2 would consider banking with Google financial products are not targeted at 18-34 year olds A new landscape: Challenger banking annual results , The Pulse of FinTech Q1 2016 Review, CBInsights 59% Bank ROE (return on equity) Rates for Savers Less Complex IT Systems Simpler product set Favorable regulation Less costly real estate No legacy compliance 40% 18% Customer View Challenger Efficiencies 36bps 108bps Challengers Incumbents 4.6% 17% Challengers Incumbents
  30. 30. 30 Although N26 scales back on some free perks MoneyConf, Madrid, Panel Discussion “How can banking become a level playing field” Last year we did a “case study” on N26 in our “European FinTech Trends”. A lot has changed! v Through on boarding and KYC services, others offer similar experience A fair usage policy on free perks Increased competition on services offered Fees for excessive ATM use (5+ withdrawals p/m)
  31. 31. Announced £50m Series B financing round at a valuation of £300m Acquired 700k customers since launch 3 years ago Offer free FX up to £5000 per month, powered by CurrencyCloud Does not have a banking license Upsell a small portion of users to their premium service for £7 that offers card + turbo transfers Poor customer service 31 Revolut’s e-money account grows rapidly Product is centred around mutli-currency accounts https://www.linkedin.com/pulse/how-do-customer-support-painful-lessons-from-adomas-baltagalvis
  32. 32. 32 Challengers status quo Atom - focused on savers, no public customer numbers Expands to Europe after raising $10m Series A Launched Current account in March, no public figures Pre-launch250k users, launching current account Raised $14m Series A Acquired Harrods bank, now with £80m in despots 500k customers , banking license
  33. 33. 33 Banking APIs
  34. 34. 34Customer Loyalty in Banking, Earnix New Survey Finds That Open Banking is a Game Changer for Millennials (Consumer banking data) Banks FinTechs APIs sit between banks and FinTechs, controlling flow of data APIs
  35. 35. 35Customer Loyalty in Banking, Earnix New Survey Finds That Open Banking is a Game Changer for Millennials Open use of data (open banking) expected to have big impacts 80% Expect an increase in competition as a result of open banking 88% Believe users will be accessing services through an aggregator In a survey of 300 European bankers
  36. 36. v v 36 A number of regional champions have emerged
  37. 37. 37Yodlee S-1 FOUNDED: 1999 ACQUIRED: 2015 Founded: 1999 IPO: 2014, 1999 MRKT CAP (IPO): $340m Acquired 2015: $590m ORGANIZATIONS: 750 REVENUE: $70m FLAGSHIP CUSTOMERS: Banking APIs are a big business, pioneered by Yodlee
  38. 38. 38 Asset Management
  39. 39. Robo-advisor assets under management are still small 39 Betterments AUM has grown from $3bn since Jan 2016 to $8.5b in May of this year. Small relative to incumbents. European Champions
  40. 40. Growth slowing in recent years 40 “Stand-alone firms will need $16b to $40b of net assets to break even. Moreover, [Morningstar] estimates…$1000 cost to add a new account, after factoring in attrition, and up to a decade to recoup marketing costs.” - Joe Manseuto, CEO The Pulse of FinTech Q1 2016 Review, CBInsights, Quote MoneyConf, Madrid, Panel Discussion “Distributed Money: The arbitrage game”, Does not compute, The Economist “Products are extremely low margin. It will be harder than the airline industry. Competition is still increasing. People coming in with competitive pricing.” Tamaz Giorgadse, CEO, Raisin (cross boarder deposits)
  41. 41. Companies acquired for tech 41The Pulse of FinTech Q1 2016 Review, CBInsights
  42. 42. Banks move into the robo-advisor space 42The Pulse of FinTech Q1 2016 Review, CBInsights1UK banks set to launch robo-advisors, FT 4 out of 5 largest UK banks plan to launch their own robo-advisors
  43. 43. v A challenging propositions for VCs 43The Pulse of FinTech Q1 2016 Review, CBInsights1UK banks set to launch robo-advisors, FT Increasing competition Long CAC payback times Low Differentiation High capital intensity
  44. 44. • Goldman Sachs Asset Management (GSAM) has 1trln in AUM. • Betterment and WealthFront have a combined $20b, suggesting tremendous room for growth • Financial advisors have historically struggled to build tech, which could justify high take out premiums 44 Wealth management attracts strategic investors Blackrock makes strategic investment into scalable capital
  45. 45. ₤15m Series B 45 Pensions largely untapped wealthhtech opportunity Undisclosed seed Automatic enrolment + Existing pension pots: £2.4tn Total pension assets in the UK (2015)* *Source: The Investment Association “Asset Management in the UK 2015-2016 report”
  46. 46. 46 Foreign Exchange
  47. 47. 47 The FX market remains highly fragmented Arma Partners FinTech Update Q1 2017
  48. 48. 48 With a number of well funded players $185m $116m $119m $100m $24m $19m $10m Arma Partners FinTech Update Q1 2017
  49. 49. 49 Taking share from incumbents 2Q 2017 Earnings Presentation Western Union sees declines in offline business
  50. 50. 50 Payments
  51. 51. 51 Acquired for £9.1 Visa Europe acquired for €16.5b Acquired for £700m Last round valuation $2.3b 2500 FTE Acquired for £1.1b Market cap £2.6b Acquired for €1.5b €5.3b market cap High level of M&A activity
  52. 52. 52 Strategic investment from VISA Plans to expand to consumer lending Strategic investment in LendUp Payment companies enter into the lending space With better data, payment companies are well positioned to make loans
  53. 53. 53 Paypal moves closer to point of sale Paypal launches credit card as Apple, Samsung and Android make progress in offline retail “Cardholders can manage their accounts, redeem Cash Rewards and make payments by logging into their PayPal account, giving customers another reason to access and use their PayPal accounts”
  54. 54. 54 Out of 300m customers, 33m have used amazon pay in 170 countries Adding 1m customers per month Over 50% are prime customers Money 20/20 Europe 2017 - Day 2 Keynote - 14:00 Giulio Montemagno, Amazon Pay “Online Giants are not sleeping…so who [are} the giants? Is the European LendingClub? Or is it Amazon…I think it is only a matter of years before you have your bank account with amazon. “ - Oliver Samwer, CEO Rocket Internet Tech giants are also well positioned to compete
  55. 55. €500b €675b €850b €1025b €1200b 2012 2013 2014 2015 2016 £1,124m £981m £863m £800m £717m 55 2012 2013 2014 2015 2016 £345m £374m £406m £467m EBITDA Revenue 12% Revenue CAGR Worldpay acquired for £9.7bn Worldpay financials demonstrate consistent growth
  56. 56. 56 Insurtech
  57. 57. 2013 2014 2015 2016 2017 $88m $129m $13m$1m$13m 57 European insurtech accelerates from low base 6 11 23 30 39 DEAL # FUNDING $m $136m (FULL YEAR RUN RATE)
  58. 58. 58 A selection of new funding announcements so far in 2017 $10m Seed ₤2.3m Seed €2m Seed €1.6m Seed ₤5m Series A €10m Seed Price comparison Full stack insurance company P2P insurance broker Insurance + connected home Health Insurance Robo-advisor for insurance
  59. 59. 59 Cybersecurity is one of most promising areas for insurtech “Cyber crime costs the global economy more than $400 billion a year and the costs will continue to grow” - PwC Insurance 2020 & beyond** Sources: *World Economic Forum – “Global Risks 2015, 10th edition” **PwC Report “Insurance 2020 & beyond: Reaping the dividends of cyber resilience” Cyber attacks are one of risk with highest likelihood and highest economic impact 59
  60. 60. Some interesting European Cybersec startups Eliminates need for passwords Real-time cyber threat identification Stealth mode startup which raised £14m Managing cybersecurity risk Quantum- computing, defence grade security Prevent sending emails to wrong people Security management platform Managing and monitoring digital footpring
  61. 61. 61 Incumbent Response
  62. 62. Startups build on top of bank systems and are looking for partners 62 Startups partner with banks Banks are partnering with marketplace lending platforms1 1Proprietary Research, The Pulse of FinTech Q1 2016 Review, CBInsights WiredCard supports Number26, CurrencyFair and LinkedFinance Bank Investments to VC-backed FinTech Companies Q1’2015- Q2’2016 Goldman Sachs Citi Santander Mitsubishi JPMorgan ING Group Bank of China China Development Mizuho Sumitomo Mitsui 0 2 5 7 9
  63. 63. 63 US Based, 100k retail customers $15m funds raised Acquired for $117m UK, Pre-launch Banking license $292m funds raised Majority owned by BBVA Finish based Founded in 2011 $5m in funds raised Banks acquire tech companies
  64. 64. 64 Case Study: Santander Bank Agility Risk Taking Mindset Customer Scale Products Infrastructure Brand Startups + Banks = Best of both worlds Kabbage - Serving SMEs in the UK via 3m Santander SMB clients ripple - Santander uses ripple for small sum currency transfer Startups Banks
  65. 65. 65Customer Loyalty in Retail Banking Santander has simplified offerings, gone digital Santander improves banking offering
  66. 66. 66 Conclusions
  67. 67. Predictions for 2017-2018 67 Zopa or Funding Circle finally go public EU FinTech will see its first major security breach 2017 will mark another record year for online lending volumes 3Q 15 4Q 15 1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17 £8.3b £7.5b £6.4b £5.7b£5.8b £5.1b £4.3b £3.7b
  68. 68. Predictions for 2017-2018 68 Consumer FinTechs without strong organic growth struggle Challengers will explore launching credits cards An EU bank announces B2C lender, following Goldman Sachs in USA
  69. 69. 69 Twitter Medium Quora Twitter Medium
  70. 70. 70 Appendix
  71. 71. 71 Expense management in 2017 Raises $2.2m in Seed Funding Raises $3.2 in 2nd Seed Raises $11m Series A

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