I believe fintech companies that pay attention to these areas will benefit from the coming wave of consolidations and acquisitions.Ron Suber, the “Mayor of Fintech”

We’re entering the golden age of fintech, and the opportunities for both established and emerging players are significant.

If you haven’t read “We are Living in the Golden Age of Fintech,” here’s the précis: the 50-year fintech innovation cycle that PayPal kicked off in the late 90s is now reaching its height, which means the next 5 to 10 years will be definitive.

While consumers are the real winners, there will also be clear winners and losers among fintech companies. Some will demonstrate staying power, while others will fail to find their place in the market.

This is the time when partnerships, joint ventures, and mergers and acquisitions will bring startups together with financial incumbents, technology companies and telecoms. It’s already happening, and fintechs that are able to forge those partnerships will be the ones to scale exponentially and be part of the transformation of the financial services industry.

Which of today’s promising fintech startups and growth companies will make the cut? Which will survive the next phase in the fintech growth cycle and go on to dominate the space?

These are the questions I have been helping both startups and established players answer as they try to envision their future.

After leaving a decades-long career in corporate finance, I began focusing on fintech five years ago, investing in and advising dozens of fintechs including Prosper, DocuSign, eOriginal, Credible and Juvo. I also travel the world talking to companies large and small in the financial space, helping them understand what’s going on in fintech trends, what’s coming up and how they fit into the story.

While there’s no crystal ball, I have been in this industry long enough to be able to recognize the companies with real staying power.


Fintech entrepreneurs that pay attention to these areas will benefit from the coming wave of consolidations and acquisitions:

Data Intelligence

Data has replaced gold and oil as the most valuable resource. The ability to access and make sense of data is what’s behind fintech’s acceleration as an industry, but it’s not about quantity. Startups are giving the incumbents a run for their money not because they’re generating or accessing more data, but because they’re looking at it differently and new ways. If a fintech company can get clarity around the data, make sense of it, organize it and combine traditional and non-traditional sources in a new way, they will out-maneuver and out-innovate the incumbents.


The ability to collaborate is another area where new fintech companies can gain the advantage over larger organizations. The incumbents have departments and factions that are often in competition with one another. They are also often affected by acquisitions that bring together conflicting cultures, personalities and technologies. Smaller, newer organizations that are able to nurture cross-functionality and coordination are at a distinct advantage when it comes to efficiency, innovation and the ability to use data in creative ways.

Financial Health

Growth companies in fintech need to think about where they are now and how they can position themselves to benefit financially from this golden age we’re in. I see fintech companies that have great ideas but no shot at becoming cash flow positive. These companies really need to figure out the unit economics, efficiencies, sales pipelines, costs and revenues, so that their company not only has a good product, but a profitable product. Without that piece of the puzzle, they’re unlikely to attract the notice of a potential buyer or have the ability to run a successful business long-term. As Chairman of the Board, I was recently part of Credible’s IPO. CEO Stephen Dash explains why Credible’s IPO was the right move not only for our growth, but also to address the rise of consumer financial marketplaces and the transition to a customer-centric model.

Operational Health

After the golden age, the next phase of the fintech cycle will see a lot of M&A activity as we exit the era of innovation and move into the era of consolidation. Fintech entrepreneurs need to prepare for this by examining their operational health with a critical eye. Innovation is still an important part of the mix, but so is the ability to pass rigorous due diligence processes. Fintech companies need to ensure that their operations are beyond reproach and ready for close examination. That includes business continuity processes, regulatory compliance, data security processes, and the clearances needed to work with a big vendor or the ability to satisfy government regulators.


While incumbents may be most guilty of complacency, I also see smaller organizations allowing themselves to become too insular. Fintech leaders need to continuously learn and expose themselves to what’s going on in the industry. Watching CNN and reading TechCrunch or talking to people at conferences isn’t enough. Traveling the world to see first-hand how different countries are solving their challenges is inspiring and eye-opening. Cities like Hanoi, Sydney, Tel Aviv, London, Mexico City all have bustling fintech sectors with smart, innovative people at the helm.


This is perhaps the most powerful driver in fintech, and a trait that every entrepreneur should be cultivating. There’s a lot of talk about IQ and even EQ (emotional quotient), but AQ (the capacity to withstand adversity) gets less attention. A leader’s grit, their ability to respond to challenges and failures, to pivot, get up and fight another round, is just as important. Every fintech leader should be ready to demonstrate perseverance and flexibility, and it’s even more important as the industry shifts gears and enters the second half of its 50-year cycle. The best book I read last year, and just recommended as part of Bloomberg’s Best Books of 2017, was Supernormal by Meg Jay, because it addresses how to develop and live with resiliency – it is well worth checking out.


Here’s the bottom line.

So far, fintech has been fueled by a rich stream of capital and endless ideas. But as we shift into the cycle’s next phase, the landscape will look very different. Those companies that plan to survive the transition need to prepare for the next phase in fintech’s evolution and focus on the strengths and capabilities that will help them stay relevant and become viable candidates for partnerships and acquisitions.


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