Today we will talk about one of the newest industries in the world, and one which is fast growing. The origin of the term ‘fintech’ came around in the 1990s, when the ‘Financial Services Technology Consortium’ project, led by Citigroup, which is one of the largest financial services companies in the world. However, the term and the industry itself didn’t really attract much attention of the world in general and even investors and consumers didn’t really give it much notice until the 2010s, so it can truly be called one of the most recent industries in the world.
So what exactly does fintech mean? Well, it is an amalgamation of the terms financial and technology, and pertain to companies who have combined the two. Even though many core traditional finance companies have incorporated technology in their businesses to cater to changing trends and becoming more innovation and inventive to attract new customers, fintech generally still refers to new startups which have emerged in the past decade or so generally and are co-existing alongside already established large finance companies. These companies have revolutionized an already existing and one of the biggest industries in the world in finance, reducing the pain points generally associated with the industry. After all, you no longer have to go banks to make a transfer through a check and then wait for several days for the money to clear and be deposited in your account. Now, you can easily from the comfort of your own home, just go online to one of the many brilliant fintech companies such as TransferWise, and simply transfer money to any place in the world (of course limited to the countries it operates in ) in their currency at excellent exchange rates and have the money deposited within a day, and even minutes in some cases.
In 2019, investment in fintech has risen to record highs, with venture capital funding for such private companies actually crossing $18 billion, an increase of $5 billion when compares to 2018. This is actually the exception to venture capital funding which actually fell by 9% across all industries, showing the trust and belief that investors have in fintech and its expected growth. Since funding and growth of the industry is increasing, so is the size of the biggest fintech companies in the US. This is shown by the fact that the average top US companies had a value of $6 billion. This year, the average value has risen to $9 billion, and the 17 largest fintech companies in the world seem to be providing excellent opportunities for investments.
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At a global level, $128 billion was invested in fintech companies in 2018, in approximately 18,000 companies, showing a strong focus on the industry just as in the United States. This is expected to grow at an astounding rate of 25% CAGR to reach a value of over $310 billion, and already accounts for around 50% of the total investment in tech. The reason behind this is the fact that new technologies which help support the fintech industry such as artificial intelligence and cyber defenses are maturing further, thereby lending credence to the belief that there is much more that can be achieved in this industry. Furthermore, focus has been on more established companies especially in Europe and the UK in particular, which is one of the most advanced fintech countries in the world, since the macroeconomic situation in the continent isn’t very good, thereby reducing funding for new startups. Even the developing countries are starting to grow in this industry, though of course they are hindered by not having the level of access or technology that advanced economies do. Even then, a lot of large deals are happening in such countries. This increased focus has also seen greater rules and regulations being developed to ensure compliance, and in Asia, there is even greater interest mainly due to interests and activities of major investors such as GIC, the sovereign wealth fund of one of the most expensive countries in the world, Singapore. Initially, fintech companies were monoline, but now they have started to diversify in order to grow further.
22 of the 100 largest Fintech companies in the world are located in the US, which is unsurprising in the least, as the US is perhaps the best country to start a major business in, as the rules and regulations are designed to foster and grow startups. Meanwhile, 25 of the companies belong to Europe, Middle East and Africa (excluding the UK), 11 are from the UK, 34 companies are from Asia and the remaining 8 belong to Australia and New Zealand. We have determined the largest fintech companies in the world according to a report by KPGM on fintech, so let’s take a look at the leaders in an industry where the sky’s the limited, starting with number 17:
17. TransferWise
TransferWise is one of the best global money transfer facilities in the world. Found in the UK, the company now supports over 750 currencies including all of the major ones such as USD, GBP and EUR among others, and has around4 million customers, while the monthly transfers are worth around $4 billion alone. The company is unique in the fact that it offers the inter-bank mid exchange rate rather than a buy and sell rate, and according to InsiderMonkey, was the best PayPal alternatives for international payments. In 2018 alone, the company earned profits of over $8 million.
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16. Nubank
Nubank is a neobank and the biggest fintech company in Latin America. A neobank is a bank but not in the traditional sense i.e. it doesn’t have any physical branches but rather maintains an online presence exclusively. The bank has still been able to get over 10 million customers and was founded only 7 years ago in 2013.
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15. SoFi
SoFi is the first US company on the list of largest fintech companies in the world, and is an online only personal finance company providing various services in this regard including student loan refinancing, personal loans, credit cards and mortgages among others.
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14. Robinhood
Robinhood has been one of the biggest success stories of the pandemic, as people who were in lockdown found an easy and efficient way to trade stocks without any fees being required. You can even trade in cryptocurrency if you’re using this app, which has at least 13 million users, though it has attracted controversy for selling order information to high frequency traders, for which it was also investigated.
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13. N26
N26 is a German neobank, which is headquartered in Berlin. The services of the bank are provided to Single Euro Payments Area as well as the United States. It has stopped its services in the UK from 2020 due to Brexit.
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12. Klarna
Klarna Bank is a Swedish bank and provides online solutions to payments to its customers, such as post purchase payments, payments for storefronts and direct payments as well. It has revenues of over a quarter of a billion dollars and is one of the oldest companies in our list, being 15 years old.
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11. Lufax
Lufax is a Shanghai based company listed on the New York Stock Exchange as well, and is the second largest peer to peer lender in the US. The company was established 9 years ago in 2011. It is owned by the Ping An Insurance Group.
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10. OakNorth
OakNorth is a UK based bank, and is engaged in providing loans and other solutions to mid-sized banks. It was found 7 years ago in 2013 and has profits of nearly 66 million pounds in 2019.
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9. Opendoor
Opendoor is aiming to revolutionize the way you sell your own home, where you can simply put up your house for sale from the comfort of your house and assess the offers you receive, and has seen over 600,000 offers being requested, with an offer being requested every 60 seconds.
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8. Ola
Ola Money is an Indian company which provides you digital options for post payments and credit cards among other services. It will soon be introducing payments of bills through the internet as well.
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7. Compass
Compass is a US based company and according to our list, is the biggest fintech company in the US. Compass is a real estate broker which has used the internet as a medium rather than a traditional small office and has around 10,000 agents who earn commissions on their sales of property, while Compass itself earns around 15 to 30% of each sale. The company is worth over $4.4 billion.
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6. Du Xiaoman Financial
Just 5 years ago, Du Xiaoman Financial is a Chinese fintech company, and the third largest such company in China, and provides AI based financing as well as personal credit services.
5. Paytm
Paytm is an Indian creation, and was established just 10 years in 2020. It is an e-commerce payment system and of course, a fintech company which is currently available in 11 Indian languages. In addition to mobile recharges, you can also pay your utility bills through this app, while making bookings such as travel, events and movies while also allowing for in store payment at stores, parking, restaurants and educational institutions too. The company currently has around 7 million merchants, and revenues of over half a billion dollars.
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4. GoJek
GoJek is a ride hailing and online payment service originating in Indonesia. The company like most companies in this list was only founded in the 21st century, and is now 11 years old, having been founded in 2009. In addition to Indonesia, the company also operates in Malaysia, India, Philippines, Vietnam, Singapore and Thailand in addition to Indonesia. The company was first established to connect courier delivery and customers and provide two wheeled ride hailing services. It initially provided only four services which have now grown to over 20.
pathdoc/Shutterstock.comGojek
3. JD Digits
JD Digits is a Chinese fintech company which only employs 7 people, including its CEO Shengqiang Chen and yet, is one of the largest fintech companies in the world. JD Digits has an upcoming IPO on China’s Star Market, though this IPO has been overshadowed by the purported IPO of the number one entry in our list, which you will see later on. JD Digits is expected to raise nearly $3 billion in the IPO, and expected post IPO growth could even see it vie for the number one position in a few years.
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2. Grab
Grab is a Singaporean ride hailing company, where in addition to transportation services, the company also engages in food delivery services in addition to digital payments as well. In addition to Singapore, it operates in several other countries as well, including Malaysia, Indonesia, Cambodia, Vietnam, Thailand, Myanmar, Philippines and even in Japan. The company became the first decacorn fintech company from South East Asia, which means a startup achieving a valuation of more than $10 billion. The company was only founded 8 years ago in 2012.
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1. Ant Group
Easily topping the list of the 5 largest fintech companies in the world is Chinese company Ant Group. Known as Ant Financial before June 2020, Ant Group is considered to be by far the most valuable fintech company in the world, worth over $313 billion. The company was about to raise the world’s largest IPO in October but the move was dramatically blocked by China on the day before the IPO.
The company is an affiliate of the Alibaba Group (NYSE:BABA), and is the owner of the biggest digital payment platform in China, which has around a billion customers and over 80 million merchants, and in June 2020, the total payment volume transaction reached CNY 118 trillion, or nearly $18 trillion. In 2019, the Wall Street Journal reported that the flagship money market fund operated by the Ant Group was the biggest in the entire world, as around 588 million users of the mobile payment system established by Ant contributing to it, which is actually more than a third of the population of the world’s most populous country.
One of the controversies that Ant Group has been engaged in has been accusations that it directly or indirectly helped China’s mass surveillance program, which has been strongly denounced across the West. The company has claimed that it has no involvement in any such matters, though the controversy has still not subsided completely.
See also 10 Most Profitable Industries in America in 2020 and 15 Biggest Cloud Computing Companies in the World
Disclosure: No positions. 17 Largest Fintech Companies in the World is originally published on Insider Monkey.