The Latest Threat To Banks

The supposedly clueless big banks are under attack.

Hundreds of financial technology (fintech for short) startups are creating services and products independent of the legacy banks.

Leading the charge are mobile point-of-sale (mPOS) startups…

(A mobile point of sale is a smartphone, tablet or dedicated wireless device that performs the functions of a cash register or electronic point-of-sale terminal.)

Square raised $150 million in the last year. Revel Systems raised $100 million in the last 12 months. And iZettle has raised $109 million in all.

They are just three of 279 startups offering similar payment solutions!

This one segment of the banking sector has attracted $1 billion worth of venture capital over the past seven years, says startup tracking company Tracxn.

Other segments getting upended range from peer-to-peer (P2P) lending to cryptocurrencies.

Global investment in the fintech sector tripled to $12.21 billion in 2014, compared to the year before.

The biggest driving force is helping millennials perform banking, investing and bill-paying tasks.

A recent survey said that 90% of millennials use online or mobile tools for everyday banking activities.

Fintech entrepreneurs are all over this.

Since 2005, 470 mobile fintech companies have been started.

Some of the big recent raises…

• NerdWallet raised $64 million from iGlobe Partners, Institutional Venture Partners, plus others. NerdWallet provides financial education and empowerment via online tools, research and experts.
• Robinhood raised $50 million from lead investor New Enterprise Associates (NEA), plus others. Robinhood has no stores or manual account management. Its tag line: “Trade stocks from your phone for free.”
• MobiKwik raised $25 million from lead investor Tree Line Asia, plus others. It’s a mobile wallet app from India that can pay bills and be used for shopping.
• Acorns raised $23 million from lead investors e.ventures and Greycroft Partners, plus others. Acorns’ app allows people to round up their daily purchases and automatically invest the change into a commission-free diversified portfolio of index funds.
• YellowPepper raised $19 million from lead investor LIV Capital, plus others. It provides mobile banking and payment solutions to financial institutions in Latin America.