Financial Technology will dramatically change your life; it may have already. This powerpoint gives the market overview FinTech as well as sector overviews concerning digital payments, online lending, and InsurTech.

1. Industry Insights
FINANCIAL TECHNOLOGY

2. How people see the banks…
It’s no wonder banks feel challenged!
Banks estimate they are likely to lose
market share up to
24%
59%of banks see loss of market share
as the biggest threat from FinTech

3. Regulation
Paperwork
Brick and Mortar
Lack of Trust
Commission/Sales
High Fee Structure
FICO!!
Customer Design
AI // IoT // Blockchain
Fully Digital
Fully Transparent
Speed
Low Cost
fico
Banks FinTech
Who would you rather work with?

4. Major Players
Lending Payments

5. Major Players
InsurTech Blockchain

6. Global FinTech Investment

7. 30 30
25
21
18 18 17 17 17 16 15 14 13 13 12 11 11 11 11
Investments by Most Active VC’s
Most Active VC’s in FinTech
*All located in Silicon Valley/NYC

8. M&A Activity

9. 0
4
8
12
16
20
%
2017 Revenue Growth
Revenue Growth by Sector

10. Valuation based on…
Ability to navigate regulatory and financial landscape
Proprietary technology and IP
Market size/attractiveness Presence of recurring revenue
Partnerships/relationships with financial institutions
Perceived Risk and Investment Horizon

11. Biggest Deal Drivers behind FinTech M&A Transactions
1) Expansion of customer base through new distribution channels
Source: Mercer Capital
4) Upgrade of ageing IT infrastructure/legacy systems in financial service organizations
3) Access to new technology/IP
2) Implement cost savings through synergies with existing business
5) Create new revenue systems

12. 1)
Biggest Obstacles Post Acquisisition
Differences in working culture
Upgrading of legacy systems
Lack of technical expertise to integrate acquisitions
Difficult in retaining key talent
If your organization is planning on acquiring a
business in the FinTech company space, how do
you plan on addressing these issues?

13. How are the banks responding?
The banks are looking to collaborate, not compete, with
disruptive companies in the Fintech Space. This includes
minority stake investments and acquisitions as well as
partnerships with FinTech focused VC’s, PE’s, accelerators,
incubators, and alliances.
77% of FI expect to adopt blockchain technology by 2020
82% (of financial services organizations) expect to increase
FinTech partnerships in the next 3-5 years (PWC)

14. Online
Lending

15. Why so popular?
 Loans to small businesses/individuals are so small the big banks don’t want to
touch them
Alternative investment for short term investors
With machine learning, AI, and neural networks, FinTech companies are able to
underwrite loans much more efficiently (and probably more accurately too).
Convenience comes at a cost, as the interest rate on the loans average 30-40%.
Target Market
SME (small-medium enterprise) lending
High earning millennials with limited credit history
These target markets include consumer unsecured credit, small business
lending, student loan refinance and high earning millennials with limited credit
history. (Pitchbook Analyst Report).
Methods Used
 Alternative datasets and analytics, applied behavioral finance, and non-
traditional repayment schedules.
Sector Oversight
P2P Lending
Business Lending
Student Loans

16. Recent Lending Investments
Date Company Investment Type Description
5/31/17 Early Stage VC Provides student loans for high-potential domestic & international students
5/16/17 Grant P2P Lending platform for business/individuals in Middle East/North Africa
4/13/17 Early Stage VC Provides simple, clear, and personalized loans for college students
3/22/17 Accelerator/Incubator Commercial real estate platform that streamlines workflow
3/21/17 Later Stage VC
Provider of student loans, wealth management, life insurance, among other
services
1/18/17 Later Stage VC Student loan refinancing platform
11/17/16 Early Stage VC Provider of marketplace lending platform for real estate debt

17. Highlighted Investment
March 21 , 2017
Post - M Valuation
$4.35 B
Profitable
The company raised $452.9 million of Series G venture
funding in a round led by Silver Lake Management on March
21, 2017, putting the pre-money valuation at $3.9 billion.
The funds will be used to finance new product and
geographic expansion.
2016 Net
Income
$38.9 M
invested in

18. Date Company Acquirer
12/12/16
7/19/16
10/20/15
9/24/15
8/05/15
M&A Transactions - Lending

19. Highlighted Transaction
February 1, 2017
Deal Amount
$100 M
Profitable
The company's mobile, multi-currency accounts offer 24-7
access and control of up to nine currencies offered in a
single account, enabling users to manage foreign currencies
and transfer funds domestically or internationally for a flat
rate, all from their mobile phones. The purpose of the
acquisition is to leverage company's platform and
underlying technology to expand SoFi's growing suite of
online personal finance offerings.
Employees
99
Acquired in

20. Payments

21. It’s a Complex Industry…

22. It’s a Complex Industry…

23. Investment in Payment Tech

24. • Introduction of clearXchange (Zelle) the Banks
answer to Apple Pay and PayPal’s Venmo (PP acquired
Braintree for $800 M, which acquired Venmo for 26.2
M)
• BrainTree is used by AirBNB, Uber, and Fab
• PayPal started making money from Venmo by allowing
merchants to accept Venmo as a payments option
(Munchery, Gametime, etc)
• Although Stripe and Square are growing, PayPal is the
behemoth in the industry
• Stripe is great for accepting payments online
(developers love it)
• Only 13% of the 680 million iPhone users have
downloaded Apple Pay
• Mobile payment volume will reach $75 billion this
year. That figure should swell to $503 billion by 2020
Biggest Players and Recent Developments

25. Recent M&A Transactions
Date Company Acquirer
5/2017
5/2017
2/2017
6/2016
3/2016

26. Highlighted Transaction
February 14, 2017
Purchase Price
$238.7 M
Profitable
PayPal has made over 10 acquisitions in the past 10 years,
furthering its dominance in the payments sector.
Q1 2017
Payment Vol
$99.33 M
bought

27. Highlighted Transaction
February 14, 2017
Purchase Price
$9.94 B
Profitable
International play for Vantiv, allowing them to become an
international payment processing company overnight.
Vantiv has 19% of the purchase processing market, second
only to First Data (20%). First Data’s $750 M purchase of
CardConnect and Mastercard’s $920 M purchase [mostly] of
Vocalink shows the willingness to consolidate and buy
market share among the big payment processors.
Market Share
19%
bought

28. InsurTech

29. Investment in InsurTech

30. Top InsurTech deals in 2016
Source: EY InsurTech Disruption Trends 2017

31. Top Players
Health
Personal
Items
Car
Cybersecurity
Emerging Market
House/Apartment
Small Business
Life

32. Major Changes to Insurance
Lower Insurance Costs/Greater
Customer Satisfaction and UX
No more
insurance
salesman/Bric
and Mortar
Trackables
(GPS/Accelero
meter/Weara
bles)
Segmentation

33. InsurTech Capabilities Focus
Over 200 InsurTech innovators have emerged in the last two years, with a heavy
focus on sensors and insurance related data aggregation

34. Highlighted Transaction
October 11, 2016
IoT
connects
OEM w/
Insurance
Generating
Revenue
“Meshify’s technical capabilities will help strengthen Munich Re’s
leadership in responding to digital transformation and the disruption
of insurance from IoT.” – Mucinch RE Boardmember
# of Meshify
employees
11
acquired

35. The Future

36. You may get your next business loan from
Lending Club, OnDeck, or Kabbage. You
can now look to Kickstarter, Indiegogo, or
CircleUp to finance your start up. Your
company's transactions could be processed
with fewer headaches by Square, Stripe, or
WePay. You can manage your money
automatically at Betterment or Wealthfront.
You can replace money itself using
Coinbase, Circle, Ethereum and Bitcoin.
You transfer money between accounts using
block chain technology and transfer money
between countries using
TransferWise/WeSwap. You insure your
health with Oscar, car with
Metromile/Guevara, home/apartment
through Lemonade, and your life through
PolicyGenius. Is there any part of our lives
that FinTech won’t touch?
Finance in our lives…

37. • Adoption of blockchain in the largest financial service organizations
• RegTech and it’s impact on FinTech
• Consolidation and M&A among FinTech unicorns
• Collaboration between banks and FinTech
• Adoption of FinTech worldwide and it’s impact on developing nations
What to look for in the future

38. Market Maps / Tech Presence in FinTech