On the back of a technology revolution that has seen blazing fast internet speeds, sophisticated mobile devices, and increasingly smarter AI, the financial industry has undergone immense disruption. For the better part of this decade, financial technology, or Fintech companies have creatively introduced emerging technologies to institutionalized financial services, producing apps that have redefined the way people interact with money and banking.
The boom has been so great that in the fourth quarter of 2015, the value of Fintech investments reached a staggering $25 billion. All across the world, the digitization of finance have not only increased the number and geographical reach of monetary transactions, but also given SME’s and individuals crucial access to funding and micro-transactions that were always out of their reach.
In this article, we look at six innovative Fintech firms from each continent and learn how their services are impacting their respective corners of the globe.
South America – IOUU
IOUU is a Brazilian peer-to-peer money lending services that employs superior tech and increased efficiency to offer loans faster and cheaper than their traditional competitors. Their strategy is to target the niche of micro and small businesses that often find themselves underserved by the big banks.
“We connect businesses who want to grow with investors who want to lend. By removing the complexity of dealing with other lenders, businesses can access finance in as little as 2 weeks and investors have the potential to earn better returns by lending to them,” Bruno Sayão, CEO and Founder of IOUU.
Launched in 2016, the business is already proving to be a huge success. After only two months in operation, IOUU had R$ 2.3 million of credit applications and R$ 910 thousand from interested investors.
While there is always a risk involved in any peer-to-peer lending business, Sayão believes their superior tech can put investor’s minds at ease. “To mitigate risk to the maximum for the investor, our technology can verify in more than 500 public and private databases the credit history of the companies that will be published for capture in the platform.”
Europe – Epiphyte
Epiphyte is a company that has built its success on the global demand for international currency transfers by bridging traditional currencies with the increasingly popular Bitcoin technology. What does this mean? Through Epiphyte, consumers are able to convert any traditional currency to Bitcoin, transfer it anywhere in the world, and then convert the Bitcoin into the currency of the destination country.
The company describes their mission as “…helping the financial world take advantage of recent advances in network technology, including the use of cloud and blockchain technologies. We believe that by making financial transactions as fast, inexpensive and direct as other digital services in the Internet age, everyone stands to benefit.”
“We have a technology that’s fundamentally capable of fixing a huge amount of these problems. It’s able to provide low-cost access to basically anyone in the world,” founder and CEO Edan Yago told Fintech Finance. “But for it to be adopted, it must be able to integrate with the existing financial system. We see it as our mission to work with financial institutions to make them better, and to utilise this technology to bring out these benefits.”
In just a few short years of existence, industry peers have already taken note of Epiphyte’s innovative services, and the company was awarded the 2014 Fintech Startup of the Year and BBVA New Banking Innovation prizes.
Africa – Branch
It is commonly believed that Africa is the largest unserved market in the global financial community, with an estimated 330 million adult Africans who have no access to traditional financial services. Branch, a company based out of Nairobi and San Francisco, seeks to address this by making micro-loans more accessible than ever before.
The key to their success is not just targeting an underserved market; they are overturning the applecart in how loans have historically been granted. Branch enables customers to use the data on their phones to qualify for a loan instead of through an existing credit score.
The service accesses a cross-section of customer data including:
- Handset Details
- SMS Logs
- Social Network Data
- GPS Data
- Call logs
- Contact lists
“Your digital trail can establish your financial track record,” Branch founder Matt Flannery explained. “Branch is a bank branch in your pocket. Our mission is to offer world class financial services to the mobile generation. We use machine learning to make credit decisions delivered in seconds. We ask borrowers to trust each other through an app to encourage and guarantee timely repayment.”
The micro-loans range from $2.50 to $500 and according to Branch, 75% of the loans are used to start small businesses, mainly in Africa. Flannery believes the reasons this service has been welcomed across Africa are multi-fold.
“The need for modern, digital financial services is overwhelming in emerging markets. A digital MFI is unconstrained by geographic boundaries. A digital MFI can extend extremely small loans, vetting millions of people at low cost. A digital MFI does not require costly collections visits by loan officers — costs which inevitably get passed on to borrowers.”
North America – Metromile
The auto insurance industry is generally considered a dinosaur when it comes to modernizing and embracing new technology. This historic delay in changing with the times has opened the door for Fintech startups like Metromile to establish a solid foothold.
The innovative company uses big data to enable customers to buy a pay-by-the-mile plan, known in the industry as usage-based-insurance (UBI). Customer simply plug a small device into their car and it logs the mileage and allows for a mobile app so they can track up-to-the-second usage. Metromile offers a basic package as low as $35 per month and $0.05 per mile.
The company was founded by David Friedberg and Steve Pretre in California in 2011. They received a significant boost when they received $191.5 million from billionaire Mark Cuban and others. In 2016, they took a giant leap to becoming a full-service auto insurance company with their purchase of Mosaic Insurance Inc. A Bloomberg report describes the deal as “…a $22 million purchase that includes Mosaic’s licenses in 50 states. This means Metromile will handle the entire underwriting and claims management process in-house and can abandon partnerships struck with other insurance companies purely for their licenses.”
UBI insurance is immensely popular with millennials who will soon be the largest consumer block in the market, who feel empowered by having their insurance costs within their own control. So it was no surprise when the Nielsen company released data in 2016 that showed upscale millennials are 79% more likely than the average consumer to use UBI programs such as Metromile.
Southeast Asia – M_Service
Africa is not the only emerging market being served by Fintech companies in the last few years. In Southeast Asia, M_Service of Vietnam uses the latest tech to allow customers to access traditional financial services through their phones and tablets.
Operating under the brand name MoMo (for Mobile Money) customers have access to two main services: a mobile wallet/payment app and a branchless banking services for those without a traditional bank account.
The demographic landscape in Vietnam would suggest this will continue to be a very successful venture. According to an article in Techcrunch, “Vietnam is picking up attention as a tech market. Smartphone ownership is growing briskly among its population of 90 million, while with one-quarter of the population aged under 25, there’s real potential for disruptive technology to gain mainstream attention.”
In March of 2016, Standard Chartered Private Equity invested $25 million and Goldman Sachs put in $3 million to back the company’s efforts.
Through both service streams, millions of Vietnamese who were previously cut off from even the most basic banking activities can now enjoy the ease and convenience of 21st century banking.
Oceana – Flatfish
Not all Fintech is aimed at the banking, lending, or payment services. Some of the more interesting start-ups have found ways to disrupt processes that for aged seemed untouchable. One such example is the New Zealand start-up Flatfish, which seeks to assist rental property owners by eliminating the need to hire a property manager.
Created by Florian Saenger and Tal Meser, the young company was recently recognized by the Kiwibank Fintech Accelerator Program.
Through Flatfish, a tenant could identify maintenance work that needs to be done. Rather than under the traditional process where a property manager would have to do the work or contract it out, Flatfish can send out for quotes and present the best option for the landlord to approve. From here, the tenant and the contractor can agree on a time to work on the issue. In the end, landlords can efficiently stay on top of maintenance issues without the need to hire a property manager.
“We see a very bright, technology-enabled future for landlords. Imagine a future where landlords can travel the world, spend time with their family and enjoy their weekend without the stress of urgent maintenance,” Meser told Stuff earlier this year.
Flatfish can also easily manage other issues such as rent payment and collection, invoice processing, record keeping and other administrative tasks that would normally fall under the purview of a property manager.