Fintech New York:
Partnerships, Platforms
and Open Innovation
Report released at the Fintech Innovation Lab’s
Fifth Annual Demo Day Event
New York, New York

Opportunity: The rapid pace of digital
technology innovation has led Banks and other FIs
to look towards the financial technology (Fintech)
community to help drive innovation from outside
and within their organizations. This approach is
referred to as Open Innovation
• The goal: create a broader value proposition for
customers that includes both financial and
nonfinancial services, delivered in a ‘magical’
customer experience
• The need: new technologies to help cut costs,
integrate with new services, comply with regulations
and security needs, and compete more effectively
with new digital disrupters entering the market
• The solution: Platforms, partnerships and open
innovation
The Financial Services Industry:
Embracing the Potential of Fintech
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• The value of Fintech investments in the
U.S. soared to $9.89 billion in 2014, up
from $3.39 billion in 2013
• Over the past five years, Fintech
investment has had a compound annual
growth rate of 56.6 percent, from $1.64
billion in 2010
• This 191 percent increase dwarfs the
increase in 2013, when Fintech deal
values in the United States climbed 68
percent
• In New York, Fintech deal values grew
by 32 percent in 2014, to a new high of
$768 million
Fintech Investment in the U.S. Nearly Tripled in 2014

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• Hot areas for Fintech investment in 2014:
payments, lending, trading technologies, and wealth
management
• Opportunities in B2B payment space:
reducing friction in cross-border invoicing and building
new tools for payments within the sharing economy
• Trends in lending: disruptive companies have
filled the void as banks have pulled back from making loans
• Automated advisory: For less complex protfolios,
automated investing is replacing traditional, labor-intensive
processes with algorithms, bringing more sophisticated
advisory services to a historically underserved sector
Where the Money is Going

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New York is Attracting More Venture Investments
Into Wealth Management and Markets
• More than four of every 10 (42 percent)
Fintech deals in New York in 2014 were in
one of the previously mentioned hot areas:
payments, lending, trading technologies,
and wealth management
“For Fintech entrepreneurs, New York provides key
advantages that no other city can match – close
access to potential customers and a deep talent pool
of individuals with an intricate understanding of the
financial services industry.”
— Maria Gotsch, President and CEO of the Partnership Fund
for New York City and Co-founder of New York Fintech
Innovation Lab

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Next Big Trends for Financial Services Firms
More Sophisticated Advisory Services to a Wider Variety of Clients
• Paradigm shift: from managing customer relationships via one-to-one communications to
automated advisory services
• Algorithms: for less complex portfolios, replacing traditional, labor-intensive processes with
automated algorithms that determine the best portfolio for the investor
• Automation: established financial advisory firms (e.g., Charles Schwab and Vanguard) are
embracing automated investing advisory as a complement to their traditional services
“Even very sophisticated institutions are just now starting to realize the depth and complexity of Fintech, and they want to
do more.” – Robert Gach, Managing director of Accenture Strategy Capital Markets and co-founder of the New York FinTech Innovation Lab
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Next Big Trends for Financial Services Firms
Distributed Ledger, Cybersecurity and Operational Transformation
• Blockchain: strong growth is expected over the next 18 months in this underlying distributed-ledger
technology that currently supports Bitcoin
o As a stand-alone technology, Blockchain has the potential to help banks, credit card companies, and clearinghouses
collaborate, creating safer, faster accounting and optimizing use of capital by reducing counterparty risk and
transaction latency
• Cyber security: investment is also likely to increase significantly in the coming year, especially in
light of broad media attention surrounding recent large-scale data breaches
• Operational transformation (insurance): facing digital disruption, innovative startup companies
are working with insurers to help transform their operations
o U.S. insurers lose $5.8 billion annually as a result of consumers switching carriers
o To address a challenging customer base, insurers have started to tap the innovations within the Fintech community
o More than four in 10 insurers (43 percent) are either planning to buy, or already have bought, a Fintech startup
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Conclusion:
Complete Digital Transformation of Financial Services is Imminent
• We are in the midst of a major disruption in the financial services that will see increasing adoption and
evolution of disruptive FinTech solutions
• Application programming interfaces (APIs) and similar gateways for quick, reliable and secure
information exchange between organizations will enable banks to build out a diverse ecosystem of
partners, bringing a broader range of products and services to their customers
• Banks and insurers are now aggressively pursuing digital transformation in various forms,
from partnerships, to accelerators and innovation labs, to acquisitions to strategic investments
• The industry is shifting its focus, moving away from large, mandated tech investment to meet regulatory
requirements to investing in disruptive digital technologies that embrace new ideas and create fast-
moving centers of innovation
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For More Information
Read the full report: Fintech New York:
Partnerships, Platforms and Open Innovation
Visit: http://www.fintechinnovationlabnyc.com
/11139.aspx
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