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Similar to Consumer FinTech deck from Charles Moldow at FinTEx
Consumer FinTech deck from Charles Moldow at FinTEx
- 1. Consumer FinTech CharlesMoldow General Partner
- 2. Financial Engines andEnvestnet Share price through funding rounds ($US) 5.52 11.65 7.65 10.23 45.00 50 45 40 35 30 25 20 15 10 5 0 S-A S-C Sec. IPO Curr. +1,280% 1.25 3.79 0.54 10.68 4.75 6.28 17.25 34.45 40 35 30 25 20 15 10 5 0 +100% S-B S-C S-D S-E S-F Sec. IPO Curr. +85% +340%
- 3. Financial Services Portfolio Lending Wealth Management Personal Investing Payments
- 4. In 1994 theS&P 500 had an Aggregate Value of $5.2T Market Capitalization of S&P 500 (Year End, $T) $5.2 1994* *Adjusted to 1994 dollars Source: ThomsonOne
- 5. By Year-End 2013,It had Reached $17T Market Capitalization of S&P 500 (Year End, $T) 2013 $5.2 *Adjusted to 1994 dollars Source: ThomsonOne $17.0 2013 6.4% CAGR 1994*
- 6. By Year-End 2013,It had Reached $17T Market Capitalization of S&P 500 (Year End, $T) $5.2 *Adjusted to 1994 dollars Note: Sectors defined by Industry Classification Benchmark; Financial Administration included within Financials Source: ThomsonOne $2.1 Technology 17% of Growth 9% CAGR 2013 1995-2013 Growth $12T 1994*
- 7.
- 8. Healthcare Accounted for12% of that Growth Market Capitalization of S&P 500 (Year End, $T) 1995-2013 Growth $12T $1.5 Healthcare 12% of Growth $2.1 Technology 17% of Growth 9% CAGR 2013 $5.2 *Adjusted to 1994 dollars Note: Sectors defined by Industry Classification Benchmark; Financial Administration included within Financials Source: ThomsonOne 7% CAGR 1994*
- 9.
- 10. The Financial SectorGrew Even Faster Market Capitalization of S&P 500 (Year End, $T) 1995-2013 Growth $12T $1.5 Healthcare 12% of Growth 2013 $5.2 *Adjusted to 1994 dollars Note: Sectors defined by Industry Classification Benchmark; Financial Administration included within Financials Source: ThomsonOne 7% CAGR $2.1 Technology 17% of Growth 9% CAGR $2.3 Financials 20% of Growth 9% CAGR 1994*
- 11. Which makes nosense…
- 12. Financials saw essentiallyno employment growth between 1997 and 2013 Total Sector Employment 14 12 10 8 6 4 2 0 Financials IT Healthcare Source: Occupational Employment Statistics, Bureau of Labor Statistics 1997 2013 0.3% CAGR 4.2% CAGR 2.0% CAGR
- 13. Market cap valueper employee has sky-rocketed Market Cap Per Employee** $700 $600 $500 $400 $300 $200 $100 $0 Financials IT Healthcare *Note: Adjusted to 2013 dollars **Note: Market cap data from 1994, employment data from 1997 (inflates IT and Healthcare 1997 result) Source: Occupational Employment Statistics, Bureau of Labor Statistics; Thomson One S&P 500 Data 1997 2013 0.3% CAGR 4.2% CAGR 2.0% CAGR Thousands
- 14. Yet, few majorbanks are becoming more efficient 70% stayed the same or became less efficient 30% of the top 500 global banks improved cost efficiency between 2009-2012 Source: McKinsey
- 15. Financials Growing Despitean Adverse Environment
- 16. Financials Growing Despitean Adverse Environment Consumer Dissatisfaction Regulatory Overhang Macro Trends 2008 Correction
- 17. Banks Walked AwayFrom Financing Small Businesses Source: FDIC, data for C&I loans <$250K
- 18. Financials Growing Despitean Adverse Environment Macro Trends 2008 Correction CCoonnssuummeerr DDiissssaattiissffaaccttiioonn Regulatory Overhang
- 19. Friends Don’t LetFriends Use Banks Source: Bain & Company, 2012 NPS Survey
- 20. Millennials REALLY dislikebanks Source: Viacom Media Networks
- 22. Financials Growing Despitean Adverse Environment Macro Trends 2008 Correction Consumer Dissatisfaction RReegguullaattoorryy OOvveerrhhaanngg
- 23. A thicket ofregulation A (non-exhaustive) list of federal marketplace lender laws Equal Credit Opportunity Act (ECOA) Fair Housing Act (FHAct) Bank Secrecy Act/OFAC Truth in Lending Act (TILA) E-Sign Act (FDIC) Dodd-Frank - Wall Street Reform and Consumer Protection Act Know Your Customer (KYC) Fair Debt Collection Practices Act (FDCPA) Fair Credit Reporting Act (FCRA) Fair and Accurate Credit Transactions Act (FACTA) CARD Act (CARD) A (non-exhaustive) list of federal regulatory bodies Securities and Exchanges Commission (SEC) Federal Reserve (FED) Financial Industry Regulation Authority (FINRA) Office of the Comptroller of the Currency (OCC) Federal Deposit Insurance Corporation (FDIC) National Credit Union Administration (NCUA) Consumer Financial Protection Bureau (CFPB) Federal Trade Commission (FTC) Financial Stability Oversight Council (FSOC) Commodity Futures Trading Commission (CFTC) Federal Housing Finance Agency (FHFA) And there are state-by-state licensing requirements specific to each asset class and business model. Source: https://www.fas.org/sgp/crs/misc/R43087.pdf
- 24. What’s fueling banking’s9% CAGR?
- 25. Banks are capturingever more value
- 26. Where is growthgoing to come from now?
- 28. The fundamental driverof growth in tech Transistor count 1971 1980 1990 2000 2008 2,000,000,000 1,000,000,000 10,000,000 1,000,000 100,000 10,000 2,300 $ per 1M transistors 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 $1000.00 $100.00 $10.00 $1.00 $0.10 $0.01 $527 $.05 Moore's Law Computing Costs Note: Y-axis on graph is logarithmic scale Source: John Hagel, Deloitte , 5/14.
- 29. Enables a financialservices revolution Moore's Law Computing Costs $45 $40 $35 $30 $25 $20 $15 $10 $5 $0 400 350 300 250 200 150 100 50 0 Smartphones Internet-Enabled Computers Bloomberg Terminals Online Debit Terminals CC/Debit Terminals ATMs 1990 1995 2000 2005 2010 Source: Comscore, Internet World Stats, 2003 Kansas City Fed Guide to ATM + Debit Card Industry, Nilson Report, ATM & Debit News
- 30. A Financial ServicesRevolution
- 31. A financial servicesrevolution Consumer Trends 1. Simplification 2. Transparency 3. Analytics 4. Reduced Friction
- 32. Sunrun distills thecomplexity of solar panel installation and financing into a few simple clicks Let’s see if your home and solar are the perfect match Our innovative software Lightmile™ gives you multiple design options for you to choose from. You’ll save and lock in low monthly rates for 20 years Lower your utility bill with solar • Find out how much you can save • Zero to little down means virtually nothing to worry about • Low monthly payments leave more money for just about anything • Free quote to get started – who doesn’t like FREE?
- 33. A financial servicesrevolution Consumer Trends 1. Simplification 2. Transparency 3. Analytics 4. Reduced Friction
- 34. Investors know whatthey’re getting with Lending Club
- 35. A financial servicesrevolution Consumer Trends 1. Simplification 2. Transparency 3. Analytics 4. Reduced Friction
- 36. Motif Investing bringscomplex portfolio optimization to the masses Make any motif your own Want to modify a motif to better suit your interests or your existing portfolio? No problem. We give you the tools to easily customize any motif. Add and remove stocks, change weightings – all at no additional cost.
- 37. A financial servicesrevolution Consumer Trends 1. Simplification 2. Transparency 3. Analytics 4. Reduced Friction
- 38. Friction is beingtaken out of the system Consumer Payments Remittance
- 39. Consumer Finance ismassive Estimated annual US revenues generated by sector 90 2,147 300 Lending 189 697 Personal Payments Insurance Total Finance 872 Wealth Management Source: Federal Reserve, SBA,; Goldman Sachs, Bloomberg, FRBNY, McKinsey, SwissRE
- 40. Opportunities abound 1Lending 2 Wealth Management 3 Personal Investing 4 Payments 5 Insurance
- 41. A Trillion DollarMarket by the People, For the People How Marketplace Lending will remake banking as we know It
- 42. Big opportunity infront of us Annual Lending Revenues IN 2013 (US$B) Traditional New Players Source: Federal Reserve, SBA,; Goldman Sachs, Bloomberg, FRBNY, McKinsey, SwissRE
- 43. Big opportunity infront of us Consumer Consumer Pay Day Purchase Finance Student Loans Real Estate Merchant Cash Advance SMB Credit SMB
- 44. Loan originations bymarketplace lenders have exploded We expect close to $9B in marketplace loans to be originated in 2014
- 45. And Lending Clubis the Leader Total loan Issuance 5.5 5 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 2007 2008 2009 2010 2011 2012 2013 2014 Total Loans Issued ($) Billions
- 46. Marketplace lending couldgenerate > 400 BP cost advantage vs banks Source: Lending Club based on St. Louis Fed, Federal Reserve
- 47. A financial servicesrevolution 1. Simplification 2. Transparency 3. Analytics 4. Reduced Friction
- 48. Applying for aloan can be easier than buying an iPhone 1. Simplification
- 49. Cost to theborrower is fully disclosed 2. Transparency
- 50. Underwriting leverages avast array of data Consumer Lending Underwriting Ownership Relationship FICO Performance Data FICO . . . Education Ownership Income Heuristics Social Graph Performance Data FICO 1970 1980 1990 2000 2010 2013 3. Analytics
- 51. Investors can ‘setit and forget it’ 4. Reduced Friction
- 52. Customers actually likemarketplace lending Average NPS Scores Insurance 80 60 40 20 0 79NPS Lending Club Credit Unions Community *Note: Adjusted to 2013 dollars **Note: Market cap data from 1994, employment data from 1997 (inflates IT and Healthcare 1997 result) Source: Occupational Employment Statistics, Bureau of Labor Statistics; Thomson One S&P 500 Data Banks Regional Banks Credit Cards National Banks Industry Averages Technology Travel/Hospitality Banking Borrower
- 53. The free marketshave spoken Marketplace vs. Fintech in the market Trading Multiples Marketplace Traditional Fintech Lenders Trulia, Inc. Shutterst… HomeAw… Zillow, Inc. Mercadol… Yelp, Inc. LinkedIn… Source: Yahoo Fiannce 3.84 13.72 17.41 9.42 8.94 9.7 19.59 7.78 0 5 10 15 20 eBay Inc. 1.33 3.22 3.83 3.54 2.05 2.84 7.1 3.16 Farmers… Marlin… NewStar… Wintrust… GATX… Jack… CIT… ORIX… 0 2 4 6 8 11.3 3.4
- 54. “People have longthought that the Internet is overhyped. But when you realize that it now has the power to reinvent the multi-trillion banking industry – I argue that it still hasn’t been hyped enough.”
- 55. The next generationof crazy ideas • Origination costs approach zero = auto-refi’s to optimize leverage • Real-time + continuous underwriting • Fractionalized labor connected directly to consumption • Distributed ownership • Conventional transactions become free + micropayments enabled = machine-to-machine payments • Micro insurance policies
- 56. Thank You! CharlesMoldow General Partner | Foundation Capital @cmoldow
Editor's Notes
- #45 So what is the opportunity in front of us? $870B in revenue opportunity, Circles. But the success of any single marketplace lender is far from guaranteed. There are a lot of hurdles to clear, and challenges to overcome.
- #46 So what is the opportunity in front of us? $870B in revenue opportunity, Circles. But the success of any single marketplace lender is far from guaranteed. There are a lot of hurdles to clear, and challenges to overcome.
- #50 So what is the opportunity in front of us? $870B in revenue opportunity, Circles. But the success of any single marketplace lender is far from guaranteed. There are a lot of hurdles to clear, and challenges to overcome.