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Where and where not top US banks are betting on Fintech in 2020

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Category trends: Capital markets holds strong, while blockchain hype dies down

Banks’ areas of focus have shifted over the years as new technologies emerge and consumer tastes evolve. Since 2018, banks have backed a record number of deals to the fintech space, focusing primarily on capital markets companies. The alternative lending, payments, SMB fintech, and wealth & asset management categories have also been consistent investment targets for banks. Blockchain, meanwhile, has cooled since garnering a high level of investor interest in 2015.

So far in 2020 YTD, the most popular investment categories have been capital markets, wealth & asset management, and SMB fintech. Looking at these deals in aggregate since 2010, capital markets takes the top spot with a significant lead, followed by wealth & asset management. The capital markets category includes companies that are augmenting or replacing securities issuance, trading, clearance, and operations. Capital markets companies that have raised equity rounds from at least 5 banks include:

  • AcadiaSoft, a workflow management and standards provider for collateral management ($58M in disclosed equity funding; participation from banking investors including Bank of America, UBS, Morgan Stanley, JP Morgan Chase, Citigroup, Goldman Sachs).
  • CurveGlobal, an interest rate derivatives venture between London Stock Exchange Group and a number of the largest global banks ($101M; JP Morgan Chase, Citigroup, Goldman Sachs, Bank of America, BNP Paribas).
  • Kensho Technologies, a platform that brings transparency to markets through artificial intelligence ($75M; JP Morgan Chase, Citigroup, Morgan Stanley, Bank of America, Goldman Sachs). Kensho was acquired by S&P Global in Q1’18 for $550M.
  • MEMX, a technology-driven stock exchange ($135M; JP Morgan Chase, Citigroup, Morgan Stanley, Bank of America, Goldman Sachs, Wells Fargo).
  • Symphony, a cloud-based messaging and collaboration platform ($461M; JP Morgan Chase, Citigroup, Morgan Stanley, Bank of America, Goldman Sachs, UBS, Wells Fargo).

Wealth & asset management, SMB and alternative lending

Wealth & asset management comprises tools and platforms for personal financial management, digital advice, wealth management, and analytics. Select startups in the category with at least 3 bank investors include iCapital Network ($240M; JP Morgan Chase, Wells Fargo, Morgan Stanley, UBS) and Visible Alpha ($68M; Citigroup, Morgan Stanley, Bank of America, UBS, Goldman Sachs).

The SMB fintech category consists of startups focused on providing financial solutions to small- and medium-sized businesses. SMB startups Trovata, Salary Finance, and HighRadius have all received funding from banks in 2020.

The alternative lending category consists of companies creating solutions for consumer and commercial lending. Select alternative lending startups that have been backed by a bank since 2019 entail ZestMoney, BlueVine, Deserve, EVEN Financial, and Built. The “Other” category includes companies operating in robotic process automation (RPA), identity verification, loyalty and rewards programs, and more.


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