Technological innovation and money go hand-in-hand. The tech can’t make the necessary leaps without the financial backing, and there’s much potential reward for investors when they identify a unicorn with the potential to change the world. This relationship is even closer when the startups are operating within the realm of fintech, creating the technology that drives investments, payments and much more.
Fintech companies often don’t have the high profile amongst consumers that other big startups achieve, but their impact can be no less transformative in our lives, even if we aren’t necessarily aware of how much easier they are making key transactions that we make every day. Meanwhile, not being household names doesn’t mean that they aren’t attracting huge investments and building a reputation in the business world.
Where are these companies getting started and establishing themselves? New research has found that countries with the most fintech businesses are also where the most money is being spent on them.
Perhaps the least surprising revelation is that the United States is home to the most fintech startups, with 1,491 of them, more than a thousand more than any other country in the world. By comparison, the United Kingdom has the second highest number at just 482, which is still more than twice the number of third-placed India and nearly three times that of China, which is in fourth.
But there’s more to having a thriving fintech startup scene than just the number of companies, and the data gets particularly interesting when it comes to the amount of funding raised in each country.
The U.S. is still top of the list, as you would expect with so many more fintech companies there and a grand total of $59 billion of funding. However, the power of the Chinese market is that with just 166 companies, it has seen investment of $42 billion, putting it in second place, well ahead of the U.K.’s $19 billion.
However, those numbers are skewed quite dramatically by the presence of Chinese fintech giant Ant Financial. The world’s highest-valued fintech company and most valuable startup, it contributes an incredible $22 billion of China’s overall $42 billion thanks to the success of Alipay, the world’s largest mobile and online payments platform and Yu’e Bao, the world’s largest money market fund.
As a sign of just how powerful and influential Ant Financial is, the fintech business with the second highest amount of funding raised on the list is India’s One97, and one of their investors is… Ant Financial. One97 is a mobile internet company whose flagship brand is Paytm, a digital goods and mobile commerce platform and payments solution provider, and these are the kinds of FinTech services that have been successful all around the world.
In the U.S., the biggest fintech business is SoFi (Social Finance Inc.), which has raised $3 billion in funding for its personal finance and loans platform, which began with an alumni-funded lending model for students and has expanded into mortgages, personal loans and refinancing. Meanwhile, in the U.K., supply chain lending group Greensill Capital rules the fintech roost and even has former Prime Minister David Cameron as an adviser.
The other two fintech companies to have hit the $1 billion mark are Nubank from Brazil and Klarna from Sweden, and they show the diversity of businesses in this sector. Nubank is a neobank — an internet-only bank — that offers an app-controlled credit card and was listed as one of Fast Company’s most innovative companies in the world for 2019.
Klarna meanwhile has changed the way a generation shops, with millennials using its “buy now pay later” model to purchase goods — often clothes — with delayed payments. Its popularity has caused concerns over how it could encourage young adults to get into debt and damage their credit scores. But its customers love it for the ability to have a payments model that fits their lifestyle and spending habits, which is what FinTech is meant to be all about.
Elsewhere in the world we can see how fintech companies offer a wide range of services, not least OPay in Nigeria, which had plans to expand into markets like ride hailing, logistics and even food delivery until the financial impacts of Covid-19 meant that they needed to scale back and focus on their existing model for now. Even the biggest fintech company in Africa isn’t immune to the problems caused by a global pandemic.
There’s lots of stories to be found in these fintech companies around the world. Take Mujeres WOW, one of the smaller ones on the list with $15,000 of investment that represents most of the $25,000 invested in Ecuador. It’s a startup committed to promoting financial inclusion and providing access to financial services for female-owned small and medium businesses, aiming to revolutionize the way lending decisions.
This is how fintech can change lives, even on a smaller and more local level to some of the big players in the market. Whether it’s changing how you shop, empowering you to grow your own business or just providing the money that makes the world go around, it’s impacting you right now. So why not find out more about fintech companies all around the globe and see where the big players and the even bigger investments are?