Financial technology, or “fintech” startups as they are often referred to, are having a moment. Final figures aren’t in for 2015 yet, but through the third quarter these companies received $10.5 billion in funding worldwide according to CB Insights. This is on track to beat the 2014 total of $12.2 billion, which was triple the amount announced in 2013 (see “Hot money”). In New York alone, fintech deal values grew by 32% in 2014, to $768 million according to Accenture and the Partnership Fund for New York City.
Fintech companies have a giant feat at hand as they attempt to inject some innovation and efficiency into a stodgy and lethargic industry that is often villainized. Many disrupters are looking to democratize information that was once only available to institutions, with the end goal of making markets more efficient. That’s the goal of Estimize, utilizing crowdsourcing to bring a crucial investment-making data set to the masses.
Statements such as “banks are under attack” are starting to hit the tape as fintech startups take on everything from payments to lending to advising. In response, many bulge bracket banks have taken on an “if you can’t beat them, join them” mentality, recognizing that the worst-case scenario is to be left behind. According to a November report from CB Insights, a third of all fintech deals since 2009 by the country’s six largest banks came in 2015.
Historically, large hedge funds and asset management funds have had the resources to scour the universe for information and insights not available to the broad market. Some even got in trouble for the tactics they employed while searching for this interesting data. The fintech favorites we discuss below are making data available to the broader markets and leveling the playing field for investors and small hedge funds, which should in turn make markets more efficient. These tools focus on displaying data and information in innovative ways that make it easier to grab insights, unlike their incumbents. Many of today’s leaders in the financial services industry offer products that ignore the user experience, which is almost as important as the data itself. It’s incredibly difficult to become part of an investor’s habitual workflow and takes time to build up trust.
The ones in the space doing this best are Slingshot Insights, Chart IQ and TickerTags.
Slingshot Insights is changing the landscape of expert calls. They provide investors with affordable access to experts and management teams to better diligence their investments. Large institutional investors spend millions of dollars a year on private conversations with key opinion leaders in order to better understand breaking news, complex topics and fact check management’s statements. These conversations frequently cost more than $1,000 per hour, making this incredibly valuable resource out of the average investor’s reach. Slingshot Insights reduces the cost by simply grouping up members interested in that call and allowing them split the cost. Additionally, Slingshot records and transcribes every interview, so that these exchanges are not lost once the call ends. This combination of collaboration and technology is bringing solid institutional resources to every investor class.
Chart IQ offers charting technology for both professionals and casual investors. For their professional clients, Chart IQ gives top financial companies the ability to create clean, responsive, interactive and mobile-friendly charting. Their personal trading platform, Technician, combines real-time data with serious analytical horsepower and intuitive mobile design to give users a seamless technical analysis and trading experience on any device, from anywhere, for free.
There are a lot of companies that cull social media chatter from market signals, but TickerTags offers a slightly nuanced approach. The company maintains a taxonomy of more than 350,000 “tags” that have a meaningful connection to one or more publicly investable assets. They help to filter immense volumes of unstructured data for relevancy and market insight, facilitating real-time event detection, information discovery and the ability to mine social data for investors. Its platform is meant to democratize information flow for investors. By monitoring the multitude of tangible and intangible business drivers that move and influence companies and markets, TickerTags helps investors arbitrage information.