The most significant news, events and trends of Q1: Fintech recap 2017

By Alex Hammond | 1 December 2017

Over the next month we will be looking back at fintech in 2017 from every angle, in order to determine the most significant developments in the industry during that time.

To kick off bobsguide’s review of the last 12 months in fintech, we have recapped the biggest breaking news, deals, people moves, and themes we covered this year. 

In this first article of our 2017 review content, we return to the beginning of the year to take a closer look at the headlines and major developments from Q1.

January

Globally, perhaps the most significant event in January was the inauguration of Donald Trump to the position of president of the United States. We asked five early questions for the fintech industry as President Trump was making his inaugural address, later this month we’ll revisit these queries in an attempt to provide some clarity on what Trump’s presidency has meant for financial services and fintech twelve months on.

January also saw a veritable who’s who of finance descend on Davos, Switzerland, for the annual World Economic Forum 2017. Heavy-hitting speakers, including former US Vice President Joe Biden and Bill Gates, filled the Davos 2017 agenda, but it was a panel dedicated to “The global fintech revolution” that piqued our interest at bobsguide.

PayPal CEO Dan Schulman, CEO of Ant Financial Services Group Eric Jing, Francisco Gonzalez, Group Executive Chairman at Banco Bilbao Vizcaya Argentaria (BBVA), Cecilia Skingsley, Deputy Governor of the Swedish Central Bank, and David Craig, President, Financial & Risk at Thomson Reuters, discussed the future of finance in relation to disruptive technologies’ increased role in the industry, global payments and transfers innovation, and how bitcoin might shape the future of banking. (bobsguide’s four article report on their discussion is available here: Part one Part two Part three Part four).

Two key landmark dates began their respective “one year countdowns” in January: the implementation dates of MiFID II and PSD2. Discussions focused on what MiFID II and PSD2 compliance should look like have dominated 2017, and will certainly not die down once the implementation date passes next month.

Discussions of the many potential use cases of blockchain in financial services were also ubiquitous globally in 2017, beginning with London Blockchain Week. Kicking off a trend that would only pick up pace as the year progressed, HSBC, SWIFT, and Deutscshe Boerse all spoke about the potential impact blockchain could have on different areas of financial services.

Other significant announcements this month included:

J.P. Morgan Selected by BlackRock as Custodian for Over $1 Trillion of Assets

InvestCloud Inc. acquires Babel Systems Ltd for $20 million

Seven out of 10 Consumers Globally Welcome Robo-Advice for Banking, Insurance and Retirement Services, according to Accenture

SimCorp Appoints New Managing Director of UK, Ireland, and Middle-East

BNY Mellon Names Jeff McCarthy CEO, Exchange Traded Funds

D+H to Support SEPA Instant Payments in Europe as a Frontrunner Service Provider

February

In the world of correspondent banking, February was the month that banks officially began transacting payments via SWIFT gpi.

ABN AMRO, Bank of China, BBVA, Citi, Danske Bank, DBS Bank, Industrial and Commercial Bank of China, ING Bank, Intesa Sanpaolo, Nordea Bank, Standard Chartered Bank and UniCredit were the first banks to begin exchanging payments via 60 country corridors, kicking off a trend as more and more financial institutions signed up to the network throughout the year.

It was in February that bobsguide posed the question: “Will 2017 be a breakthrough year in establishing better working relationships between traditional financial services and fintech companies?” This was in direct response to a perceived shift in the attitude of financial services towards more agile, user experience driven products from hostility to one of cooperation. Certainly one of the prevailing trends of the past 12 months was an overwhelming consensus that it is now time for banks and fintechs to put the insults to bed and instead join forces to make best use of the other’s positive attributes.

If pushed though, does one side still hold a competitive advantage over the other? In an effort to answer that question, we posed another: “Who needs the other more, fintechs or traditional financial services?

This month saw London host Finovate 2017, showcasing innovative new products and bringing together industry experts from the fintech sector and senior financial, banking, and technology executives.

The conference was focused around two days of presentations, where fintech start-ups and established industry leaders were given a mere seven minutes to promote their company, and launch new products as well as demonstrate existing ones and explain to a packed auditorium how they were solving a critical issue currently plaguing financial services.

Part one Part two and Part three of bobsguide’s report of the event is available here.

February was also the month that, in separate reports, both Broadridge and Synechron published research data demonstrating that the vast majority of financial services professionals believe that blockchain will have a substantial on financial services.

We also listed our 10 UK fintech companies to look out for in 2017, we will review in further detail to determine how successful our predictions were later this month.

Other significant announcements this month included:

Citi launches APIs for Treasury Services

FIX Trading Community announces enhancements to the FIX Protocol to meet the requirements of MiFID II and MiFIR

Hedge Funds Exit Energy, Consumer Discretionary, and Healthcare in Q4, S&P Global Market Intelligence Quarterly Hedge Fund Tracker Finds

Temenos announces proposal to acquire Rubik

LexisNexis® Business Insight Solutions Expands Risk Management Portfolio with New Risk Media Monitoring Solution

CloudMargin Announces Further Senior Hire with New Chief Technology Officer

Masterpass by Mastercard Expands Payment Options for Thousands of Merchants

Barclaycard partners with VocaLink to enable merchants to accept mobile payments throughPay by Bank app

March

Perhaps the biggest development in fintech market from an M&A perspective in 2017 came in March, when it was announced that Misys and D+H would be merging to form the third largest fintech in the world by market cap. The new company has been named Finastra.

In future conversations with bobsguide, former Misys and current Finastra CEO Nadeem Syed described the deal as smooth, and one that made sense for both parties.

“Misys always had a global footprint from a customer perspective, but this was particularly focused outside of North America. If you look at revenue, 83% of Misys revenue was generated outside of the US. On the other hand, D+H is a global business but the vast majority of its revenue (88%) is generated in the North American market. When you combine those revenue streams together, you create a good mix of revenues, including markets in Africa, Asia and Europe”, Syed explained to bobsguide.

“Then last summer it became clear that D+H would be open to acquisition conversations, and we saw a great opportunity to merge the company with Misys to create a much more comprehensive offering, with a robust revenue footprint of $2.1bn and 9,000 customers.”

When the deal was announced we asked the question: “Is the Misys, D+H merger the first domino that will set off a fintech “super-merger” trend?” Whilst we are yet to see any deals match the market impact of the Misys-D+H merger, it still feels inevitable that consolidation will continue to take hold of the industry and vendors push to for greater economies of scale and the development of more complete end-to-end services as financial services move away from a best-of-breed solution model.

We also took a closer look at the fintech markets in Asia, where investment in financial technology is dramatically outpacing investment in the US and Europe for the first time. Collaboration between financial services and fintechs in Asia is also at an all-time high, and in addition India has become a fertile innovation ground for financial services, particularly retail banking.

March was also the month bobsguide published our 10 US fintech companies to look out for in 2017. Our review of the performance of those companies will be published later this month.

Other significant announcements this month included:

Dan Watkins to Head BNY Mellon Markets Team in EMEA

Broadridge Expands its Global Post-Trade Control Solutions Through Acquisition of Message Automation

Capital One announces new head of its UK business

SimCorp appoints new CFO

BlackRock Positions Equity Investment Platform for Future of Active Management

AIM Software appoints Gayatri Raman as Chief Executive Officer

The Emerging Payment Association appoints Andrea Dunlop as Deputy Chair

Thomson Reuters and SAP Team to Help Businesses Manage Compliance and Third-Party Risk Challenges

Deutsche Bank Opens Innovation Lab in New York City

SmartStream hires Richard Bowler as Chief Financial Officer

IBM and SecureKey Technologies to Deliver Blockchain-Based Digital Identity Network for Consumers

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