Table of Contents
Reviews of the book ii
Preface viii
1 Fintech markets and players 1
1.1 The fintech market segments 1
The application of the Business Model Canvas-one conceptual format for all fintechs 3
Analysis of venture capital financing and data collection 4
1.2 GAFA versus Alibaba and Co 6
1.3 Strong worldwide growth of venture capital-financed fintechs 10
Foundations and innovation potential strongly differentiate the fintech business models 12
2 More convenience with alternative payment methods 15
2.1 The competitors in the payments market 16
2.2 PayPal - important partnerships made it great 19
Three steps to global leadership 20
Adding value for customers with buyer protection 20
Two main revenues streams 22
2.3 Ant Financial with Alipay - connecting payments and lifestyle 22
Simple and cheap solutions for customers 23
More than payments - lifestyle 24
Strong customer base by connecting with e-commerce 24
Undisclosed costs and revenues 26
2.4 WeChat Pay - red envelope campaign 26
Innovative mobile usage and data generation for Tencent 27
One app for everyday situations 27
A Chinese tradition for marketing 28
7200% revenue growth in 10 years 29
2.5 Adyen - disrupting the payment back-end 30
One-stop payment platform versus traditional patchwork 30
Growing with the customer 32
Expenses and revenues 32
2.6 Klarna - buy now and pay later in e-commerce 32
Country-adapted flexible payment options 33
Enhanced usability in online shopping 33
Impressive revenue growth 34
2.7 Venture Capital financing of payment fintechs 34
Summary 40
3 Why robo-advisory will replace many human investment advisors 42
3.1 Key differences in business models of the robos 43
Traditional asset managers 43
Fully automated robo-advisors 44
Hybrid offerings 44
Self-service robos only for self-decision-makers 45
The innovators: Betterment and Wealthfront 45
Personal Capital 46
Scalable Capital 46
The market leader - Vanguard Personal Advisor Services 48
The cost leader - Schwab Intelligent Portfolios robo-advisory 48
How efficient is the investment strategy of a robo-advisor? 49
3.2 Business Model Canvas for robo-advisory 51
3.3 Strategic challenges 53
Cooperation with a robo-advisor, acquisition or even in-house development? 53
Investment advisory regulation as chance and limitation 54
Artificial Intelligence and robo-advice 55
The price clients pay for robo-advisory a case study in Germany 57
3.4 Venture capital financing of robo-advice 59
Financing in the U.S. and in Europe 63
Large differences in amounts raised between two successive financing rounds 66
Shorter financing gaps between funding rounds in the U.S. than in Europe 67
3.5 Insights into valuation of robo-advisor business models 68
Summary 70
4 The need for social trading 71
4.1 Disrupting the investment landscape 72
How social trading works 72
Wisdom of the online community 72
Can you trust signal providers? 74
Social trading and contracts for differences 75
4.2 Three business models of social trading 76
eToro - a leader in social trading 78
ZuluTrade - networking pays off 81
Wikifolio - following traders with certificates 83
4.3 Prospects of social trading 86
Benefits for traders 86
Market potential 87
The regulatory challenge 88
4.4 Venture capital financing of social trading fintechs 90
Summary 94
5 Will crowdfunding replace the bank loan? 95
5.1 When they mobilized the crowd 95
An answer to every demand 96
The crowdfunding market landscape 96
Regulatory barriers stow down growth 98
5.2 Equity-based crowdfunding 100
AngelList - with zero management fees 102
Low fixed cost and scalable business model 103
5.3 Lending-based crowdfunding and LendingClub 105
5.4 Donation-based crowdfunding 108
5.5 Reward-based crowdfunding and Kickstarter 110
5.6 Real estate crowdfunding with high growth rates 113
5.7 Venture capital financing rounds for crowdfunding 115
U.S. crowdfunding start-ups with higher financing amounts 119
Crowdlending with only few start-ups in the U.S 120
U.S. crowdfunding fintechs require more time to refinance 122
Summary 124
6 Balance-sheet lending from fintechs providing credit & factoring 126
6.1 Profitable platforms for SME loans from OnDeck 126
White label partnership with JPMorgan 128
Revenues, costs and risk management 129
6.2 Frictionless consumer lending from Avant 130
6.3 Venture financing in credit & factorings 132
High number of VC financing rounds 133
Credit & factoring fintechs move toward maturity 136
Summary 138
7 The future of personal finance management 140
7.1 Business Model Canvas - Mint 142
Automatic data categorization as key activity 142
Value propositions 143
Customer relationships and sales channels 143
Revenue from commission for recommendations 144
7.2 Business Model Canvas - Credit Karma 144
Free credit scores as key activity and value proposition 145
Customer relationships and segments 145
Revenue from commission of product partners 145
7.3 Business Model Canvas - Meniga 146
Application programming interface and PFM activities 146
Data consolidation and enrichment as value propositions 147
Customer segments and sales channels 147
Main revenue from software licenses 148
7.4 Business Model Canvas - u51.com 148
Value propositions for more than 100 million users 148
Sales channels supported by "Uncle Bo" 149
High revenue growth 149
7.5 Venture capital financing of PFM start-ups 150
Summary 155
8 The Impact of blockchain technology 157
8.1 Use cases for more efficiency in banking 157
8.2 The importance of blockchain - "let the code speak for itself" 157
Key elements of blockchain architecture 157
Business, technical and legal aspects of blockchain 160
Blockchain construction 161
The generalized blockchain process 162
Smart contracts as blockchain version 2.0 163
8.3 Benefits for the financial services industry 164
8.4 Business Model Canvas with blockchain use case payments 165
Key partners and activities 166
Key resources and value propositions 166
Establishing a new revenue model 168
Cooperation between fintechs and banks 169
8.5 Venture capital financing and Blockchain start-up landscape 169
Summary 171
9 How serious are cryptocurrencies? 172
9.1 Cryptocurrencies and tokens 172
Bitcoin as the first cryptocurrency 173
Sequence of a bitcoin transaction 174
Litecoin as a fast alternative 175
Ripple Labs Inc 175
Ethereum 177
9.2 Good or bad perspectives for cryptocurrencies? 178
ICO as the new IPO 180
Crypto exchanges 182
Tax treatment favorable for long-term retail investors 183
9.3 Business Model Canvas for cryptocurrencies 184
9.4 Venture capital financing of start-ups in blockchain & cryptocurrencies 185
Summary 190
10 Big data and Al 191
10.1 Impact of big data on the traditional banking sector 192
10.2 Business Model Canvas for big data 194
10.3 Al and chatbot Inga from ING 196
10.4 Chatbot Erica from Bank of America 198
10.5 Machine learning with contract intelligence from JPMorgan 199
10.6 Venture capital financing for artificial intelligence 201
Summary 203
11 Venture capital financing and fintech valuations 204
11.1 Global Fintech funding and Europe versus the U.S 205
Research concept for the sample of 379 fintechs 205
Number of fintech financing rounds 207
Leading position of China in recent capital raised 208
Niche markets in Europe open for new fintechs 210
11.2 Allocation of money raised per financing round and business model 214
From seed and angel funding to rounds E and F in Europe 214
From seed and angel funding to round F in the U.S 215
First venture capital investments in payments and crowdfunding 218
11.3 Patterns in funding size of successive financing rounds 223
Comparison between financing rounds A and B 224
Fintech segments with the highest funding 225
Mega funding rounds 227
Fintech ranking by financing scorecard 228
11.4 Features of Fintech Valuation 230
Fintechs with the highest valuation 230
Example valuation of robo-advisory with EV/AUM multiples 232
Fintech valuation with unicorn status and median time 233
Summary 235
12 Conclusion: What we can know and can not know about the future of fintechs 236
Fintech strategy in banking: Collaborate, invest or develop in-house 236
What we can know about the future of fintechs 237
What we can not know about the future of fintechs 238
Last but not least 239
List of figures 241
List of tables 245
Abbreviations 247
Glossary 249
Appendix 255
Publication bibliography 261
Index 291
About the Author 295
