TOPOLOGY OF FINTECH INDUSTRY

This blog post outlines a topology to understand the rapidly growing fintech industry and institutions operating in the space.

MARKETPLACE LENDING

Online marketplace lending refers to the segment of the financial services industry that uses investment capital and data-driven online platforms to lend either directly or indirectly to consumers and small businesses.

Sub-sectors:

• P2P Lending
• Loan Securitization
• Direct Lending
• Platform Lending
• Merchant Lending
• Crowdfunding

Total Addressable Market (TAM):
~ US $1 trillion in the US

VC Investments in space: 
2015: ~US 2.7 billion
2016: ~US 623 million

Major Marketplace Lenders:

• Lending Club
• Prosper
• On Deck
• Square Capital
• Kabbage

PAYMENTS

Mobile payments allow consumers to use their smartphones or other mobile devices to make purchases and transfer money. Consumers and businesses use these devices to make and receive payments instead of relying on the physical use of cash, checks, or credit and debit cards.

Sub-sectors:

• Mobile Wallets / Payments
• Check Payments
• Merchant Payments (C2B payments)
• Payment Processors / Card Networks
• Subscription Management Software
• B2B Payments

Total Addressable Market (TAM):
~ US $178 trillion in the US

VC Investments in space: 
2015: ~US 3.7 billion
2016: ~US 13.5 billion

Major Payment Companies:

• Apple
• Google
• Square
• Venmo
• Stripe
• Vantiv
• Ariba Pay

DIGITAL WEALTH MANAGEMENT

Digital wealth management platforms, including robo-advisors, use algorithms based on consumers’ data and risk preferences to provide digital services, including investment and financial advice, directly to consumers. Digital wealth management platforms provide services including portfolio selection, asset allocation, banking and account aggregation, and online risk assessments.

Sub-sectors:

• Robo Advisors
• Personal Credit Services
• Personal Wealth Management

Total Addressable Market (TAM):
~ US $20 trillion in the US

VC Investments in space: 
2015: ~US 786 million
2016: ~US 657 million

Digital Wealth Management Companies:

• Betterment
• Wealthfront
• Sigfig Wealth Management
• Personal Capital
• Raisin

DISTRIBUTED LEDGER TECHNOLOGY

Distributed ledger technology involves a distributed database maintained over a network of computers connected on a peer-to-peer basis, such that network participants can share and retain identical, cryptographically secured records in a decentralized manner.

Sub-sectors:

• Blockchain
• Cryptography
• Cryptocurrencies

Total Addressable Market (TAM):

VC Investments in space: 
2015: ~US 441 million
2016: ~US 544 million

Major Distributed Ledger Technology Companies:

• Ethereum
• Circle
• Coindesk
• Ripple
• Bitfury
• Veem

The FinTech Industry is not a new industry, and its opportunities, risks and legal implications are not novel. The current concerns of policy-makers and industry arise not from the technology itself but from who is applying the technology to finance.