The Near Term Future of Financial Services

FinTech of the Future

In Spring, it is the time for the rejuvenation of the earth. Many times we use it to rethink the future and its meaning and direction. We recently evaluated startups that are interesting to us and why. We used the reflection to determine what we want to dig in upon and what we want to avoid. Entrepreneurs are so much fun talking to and learning from them that we need to be smart about where we spend our time as a firm.

This review leads us to discuss the future of FinTech. Some key themes are playing out, and others that are interesting but need more time to germinate. Below we list a few of these themes:

  • DeFi is here. The infrastructure has been built to deconstruct finance to its basic elements. Let the entrepreneurs take it from here on new forms of FinTech to build and new markets to create. The rails are available to them. Further investing in Railz (which is one of our portfolio companies) that is part of this infrastructure (pun intended) is part of what we are looking for in a startup.
  • AI continues to amaze. At every turn, another interesting use case pops up to challenge the way we do work today in FinTechs and incumbents. We often dig into these companies as we know they are remaking productivity in our industry.
  • API’s are the way to lock on and go. We encourage our companies to think about the distribution of their software in an API. What an easy way for the customer to make the connection and become a paying client.
  • Digital-ness is the newest asset value. As Millennials take over the world, thank goodness, they value assets differently than the previous generation. What you collect is a statement about your personality and your values. It is no surprise that those who grew up digitally-enabled would rather collect digital assets like Bitcoin or NFT’s over traditional financial products. We share a great article on a NY Times writer who explains NFT’s well and sells his column as an NFT...wonderful!

As venture investors, we look at these trends as ways to think about what startups to back. It’s a long road to their success so getting trends right is extremely helpful. It is also important to exploit your uniqueness as a firm. In our case, it's our data insights and our networks of connections that matter. So we will invest in some of these trends and not in others.

It would be great to hear what you find interesting and on strategy. Please share your insights with us at MCasady@VestigoVentures.com.

— Mark & Dave


Vestigo Ventures Update

Mark Casady Joins BNY Mellon's VC Advisory Board For Its Accelerator Program

We are thrilled to announce that Mark Casady will join BNY Mellon's first-ever VC advisory board to provide mentorship and guidance to early-stage companies within BNY Mellon's Accelerator program.

BNY Mellon brings in VC advisory board for accelerator programme
BNY Mellon is excited to introduce the Accelerator Program’s first-ever Venture Capital Advisory Board (VCAB), a panel of leading global fintech investors who will offer insights and guidance to Accelerator Program participants.

Envisions Interview

The Near Term Future of Financial Services

w/ Kartik Sakthivel, CIO at LIMRA and LOMA

This month, Frazer speaks with Kartik Sakthivel about the near-term future of financial services and how it will change and affect the current incumbents. 

Near Term Future of FinTech

The core of Vestigo Ventures' thesis is investing in early-stage financial services companies that recognize breakaway growth opportunities to create multi-tenant scalable business models (Enterprise, SaaS, or PaaS). By design, these solutions enhance the human experience in finance. Underneath these models, we see that they reduce the cost of operations, delight customers, through a frictionless experience, and improve the mission outcome against a meaningful set of problems. Gaining market-share relies on a formula that includes lower customer acquisition cost, delivery of an engaging technology platform with a recurring revenue model resulting in a meaningful lifetime of value for the client, customer, and business.

Today the Entrepreneurs' makers pallet is data, software, and compute power. I use the word pallet intentionally as the great Entrepreneurs that we invest in and seek out are artists. They are leaders who have the vision and grit with a deep understanding of the human condition. They organize teams that build sustainable, transformative business models. Their tools are machine learning, artificial intelligence, APIs, cognitive computing, robotics, Blockchain, nearly human chatbots, and data analytics.

We only have to reflect on the rapid creation of vaccines that scientists and healthcare professionals created using forms of artificial intelligence. They constructed rapid models to understand: infection rate, the plan of defense and deployment, and optimized modern production facilities to put vaccines in healthcare workers' hands and needles in arms. This value chain of humans and technology working together to produce much-needed solutions against this global pandemic is an example that will change the world.

Looking closely at finance, we see a spectrum of forces affecting the near-term Fintech landscape; while not a pandemic, it is a growing societal demand for the democratization of wealth solutions. This results in FinTech’s near future; acceleration in data analytics, digital transformation, and modernization. The underlying forces are not viral. They are a collection of converging issues: low-interest-rate environment, distributed workforce (that will evolve and remain in some fashion long after we put the pandemic behind), high cost of operations due to old infrastructure, a lack of optimized customer engagement with trusted sources, changing political and regulatory landscapes, and the growing threat to digital (identity theft, AML, fraud, and cyber-attacks).

In this landscape of challenges and new technologies, visionary entrepreneurs will create great new businesses in global finance. The proliferation of machine learning and artificial intelligence will continue to find its way into the customer value chain of solutions that expedite the democratization of financial services.

The results will be more people entering into the virtuous cycle getting out of debt, saving, investing, and optimizing their vision of retirement. This will mean that our financial Institutions and advisors will be informed and equipped to reach each client smartly and at the right time with empathy and solutions that understand their unique psychology of money. Every day is an opportunity for us to help the leaders of our portfolio of companies as they build and deploy The Next Near Future of FinTech.

— Ian Sheridan


Portfolio Updates

Alloy Named One of the Top FinTechs to Work For in 2021

We are proud to see that the American Banker has named Alloy one of the top FinTech companies to work for in 2021.

Best Fintechs to Work For 2021
Top executives from the 49 companies that earned a spot in this year’s ranking of the Best Fintechs to Work For cite the need for nimble shifts in business strategy, leadership style and recruiting tactics among the lessons they took away from the challenges of the coronavirus crisis.

ZenLedger Speaks About the Impact of DeFi

Decentralized Finance (DeFi) has seen tremendous growth in the past 2-years, and ZenLedger discusses the risks and tax implications of this growth. Additionally, they cover what the future of DeFi will look like in financial services.

Wagmo CEO Speaks About How Employers Can Gain by Expanding Benefits for Employees

In this article, Christie Horvath, CEO of Wagmo, discusses how employers expanding their employee benefits to pets can increase productivity and retention.

Wellness benefits should extend to employees’ pets too
Cash-strapped millennials make up the bulk of the workforce and they are looking for support in caring for their furry friends.

Romy Parzick, CEO of Vault, Speaks About Leadership

In this Forbes article, Romy Parzick speaks about her leadership strategy and how it's been crucial in driving Vault's mission to fix the student loan crisis.

How One CEO Achieves Candor With Compassion In Mission Driven Work
People-centered leadership is what drives Romy Parzick, CEO of Vault. “We are fueled by the desire to help solve this multi-generational crisis that affects millions of our peers,” Parzick said of the student debt crisis.

Interesting Reads

The New FinTech Galaxy and Role of Embedded Finance
Inventing new concepts, ideas, technologies and utilizing them to an extent that has not been though…
Google Cloud BrandVoice: 6 Trends That Will Shape The Financial Services Industry In 2021
From hyper-personalization to zero-trust networks to embedded innovation, here’s a look at what’s driving financial industry conversations and technology roadmaps.
Fintech, AI and ML: What you need to know in 2021
Over the past few years, the financial world has been increasingly adopting smart solutions to cope…

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