Fintech

Happy 2020 readers! This is the second post in a two-part blog series titled 15 fintech companies to watch in 2020. Read part one with the first 7 fintech companies to look out for and meet us back here shortly. 

Here are the last, but certainly not least, 8 of 15 fintech companies to watch out for in 2020—and the ones that we believe are paving the way for an entirely new financial industry in the years to come.

15 fintech companies to watch in 2020: Part II 

8. Hydrogen

American global fintech company Hydrogen is an acceleration platform from which businesses can deploy fintech apps and solutions. Hydrogen provides its B2B customers with a powerful toolkit in order to build innovative digital financial applications at a fraction of the time and cost. For example, VoPay and Hydrogen have partnered to offer end-to-end open banking payments in 2020 and beyond. Hydrogen is part of a leading group of firms that are helping make fintech 2.0 more open, accessible, and innovative through APIs (Application Programming Interface). 

9. KOHO

One review of KOHO Financial called it a “marriage of a bank and budgeting app,” which is a helpful way to put it. This Toronto fintech company is a mobile-banking service that has helped more than 120,000 Canadians track their spending. In May 2019, the company raised $42-million in growth capital. Similar to a chequing account, users put money into their KOHO accounts and spend as if it were a credit card (but without the monthly fees). The app tracks their spending, savings, and helps them budget toward goals in real-time. 

10. Envestnet | Yodlee

The American software company, Envestnet | Yodlee, is a leading data aggregation and data analytics platform for digital financial services. Envestnet | Yodlee as over 25 million users worldwide and over 1,200 financial institutions and fintech partners (including 15 of the top 20 U.S. banks). It supports and powers many financial technology companies and banks, allowing users to access their personal financial accounts from any device, anywhere and transform modern banking. 

11. Borrowell

In 2019, Borrowell closed a $20 million Series B funding as it reached over one million users. This Canadian fintech company gives its users a free credit report and credit score—no strings attached. Borrowell helps Canadians track their credit score and make better, more informed decisions about their credit (and financial situation). 

“Consumers want to know where they stand with their finances,” Andrew Graham, co-founder and CEO of Borrowell told BetaKit. “We help them do that, with our free tools, product recommendations and credit scores and reports.”

12. Flinks

Flinks is a Montreal-based data software company that connects to over 250 million financial accounts and provide financial insight and credit risk intelligence. In other words, it provides the necessary link and data between mobile financial apps, financial institutions and consumers who want to modernize their banking. For example, in October 2019, Flinks and VoPay announced an official partnership in order to provide a secure consumer-focused open banking payment solution via VoPay. 

13. Kabbage

Kabbage Inc. was named on the Forbes Fintech 50 2019 and recently valued at $1.2 billion. This Atlanta-based fintech company saw an opportunity back in 2008 to improve the efficiency and profitability of small business lending. Where banks have a high standard to meet for small business loans, Kabbage’s automated lending platform pulls data from many data sources. This allows Kabbage to automatically evaluate the health of the business, asses the risk, and provide a line of credit where applicable.

14. MX

MX has been called one of the fastest-growing fintech companies—and one to watch out for in 2020. MX provides financial services data, such as data aggregation, enhancement, and analytics, and experience, such as mobile banking and verification. In June 2019, the company announced a $100 million Series B round of financing, bringing the total equity financing to $175 million. According to Battery Ventures’ (the Series B investor) Michael Brown, “MX is powering some of the top financial institutions in the world and is simply one of the most promising fintech companies we’ve ever seen.” 

15. VoPay

Last, but most certainly not least on the 15 fintechs to watch in 2020, is VoPay. This Canadian-headquartered fintech company is a leader in digital payment technology innovation. VoPay empowers businesses to provide exceptional financial services and create a customer-focused open banking payment solution. The company made several strategic moves in 2019, including by announcing its partnership with Hydrogen and with Flinks in order to offer seamless banking experiences for users across North America.  

Stay tuned for more growth from us in 2020 and beyond. Learn more about VoPay and our payment solutions. 

This is the first post in a two-part blog series titled 15 fintech companies to watch in 2020. 

Fintech, as many of you know, is short for financial technology. According to a Forbes post that we recently summarized called Fintech: The Fourth Platform, the term fintech has thus far meant taking a well-known financial product and making it more digitally accessible by building software around it. 

However, as Matthew Harris explained in his two-part articles, fintech is set to go far beyond just improving existing products and services in finance. He believes that fintech will join the likes of the internet, cloud, and mobile to innovate and found entirely new products and services. This will change everything from the way we bank to the ways in which we value and view money. This major shift to fintech as ‘the fourth platform’ in the tech stack could create $3.6 trillion of value. 

Here are the first seven of 15 fintech companies to watch out for in 2020—and the ones that we believe are paving the way for an entirely new financial industry in the future. 

15 fintech companies to watch in 2020 

1. Revolut 

London-based tech unicorn Revolut launched in July 2015 and is now one of the world’s fastest-growing bank account providers. Revolut is a digital banking alternative for instant payment notifications and fee-free international money transfers and spending. It has more than 8 million customers worldwide (albeit mostly in Europe) and has processed over 350 million international transactions totalling more than £40 billion. The financial app and debit card operator is a privately held company with over $331.63 million in funding. 

The end of 2019 saw the beginning of Revolut’s U.S. rollout with Mastercard as a partner. Revolut is also set to come to Canada in 2020 and continue providing international fee-free debit cards to European customers with Mastercard. 

2. Plaid

U.S.-based fintech company Plaid was founded in 2013 and recently valued at $2.65 billion. The company builds infrastructure to power a number of third-party applications (including VoPay) and allows users to interact with their bank accounts online. In other words, it is a simple way for consumers to connect their bank accounts to mobile apps. The fintech company has analyzed over 10 billion transactions to date. It has integrated with 15,000 banks in the U.S. and Canada and has begun its European roll-out. 

3. Mylo

This Montreal-based fintech company is one to watch in 2020. Mylo launched in July 2017 and has already been downloaded by over 500,000 Canadians and raised $14 million in funding. This app helps Canadians automate their savings and investments. For example, as a Globe & Mail article explained, Mylo rounds purchases up to the nearest dollar and invests the difference weekly in a conservative exchange-traded fund (ETF) portfolio. In November 2019, the company raised $10 million from National Bank and Desjardins Capital.

4. PayBright

PayBright was named Canada’s fintech company of the year in 2019—and is slated as one to watch for 2020. This Toronto-based company provides a consumer payments platform focused on real-time point-of-sale (POS) installment plans. PayBright has partnered with over 5,000 merchants around the globe to allow shoppers to pay off purchases in four easy installments. The company has approved over $1.25 billion in purchasing power for consumers in Canada and beyond. 

5. Plooto

Plooto is a Toronto-based startup that is helping put the city among the fastest-growing tech markets in the world. It is a payment management platform that allows Canadian and U.S. businesses to send and collect payments and manage invoices internationally. The Digital Finance Institute named Plooto (as well as Mylo, PayBright, Flinks and Borrowell included in today’s post) as some of Canada’s top 50 fintech companies of 2019. 

6. Lexop

Lexop is a fast-growing Montreal-based fintech company that removes friction in collections. The company helps its B2B customers automate collections recovery efforts as well as retain customers and provide a convenient payment experience. Launched in 2016, Lexop has since participated in 500 Startups and FounderFuel, won many awards, was nominated as “most promising startup” by NACO (National Angel Capital Organization) and has announced several partnerships, including with Centris.

7. Chime

San Francisco-based fintech company, Chime, is now considered the leader in the U.S. challenger banking segment. It is part of a new kind of mobile and digital-only banks and is one of the fastest-growing bank accounts in the U.S. Chime members receive a Chime debit card, spending and savings accounts, and an app that keeps their financials in check. It was valued in December 2019 at $5.8 billion, after raising $500 million in funding, the largest investment in a digital bank since NuBank raised $400 million. 

Stay tuned until next week for Part II of 15 fintechs to watch in 2020. 

Forbes contributor and investor at Bain Capital Ventures, Matthew Harris recently wrote a two-part Forbes article called Fintech: The Fourth Platform. In the articles, he discusses the future of financial technology (or fintech) companies and how a major shift to fintech as ‘the fourth platform’ will create $3.6 trillion of value. That is five times the revenue multiple that the internet, cloud, and mobile platforms produced altogether upon startup at just under $3 trillion. 

In other words, Harris sees fintech as a huge opportunity. 

Here’s why we’re listening: Harris bet on fintech two decades ago, back when Venture Capital investment in financial services was non-existent. Today, these financial technology companies represent 14% of venture business. In 2018 alone, fintech startups raised nearly $40 billion. Bain Capital Ventures has invested over $700 million in fintech companies over the past seven years—and they’re turning their attention to companies that use fintech embedded in their business models and tech stacks, rather than as a primary business model. 

Let’s unpack and summarize the opportunity that Harris presented in Fintech: The Fourth Platform.

Fintech and our current technology stack

Harris first defines fintech as “taking a well-known financial product” and “building software to make it digitally accessible as well as easier and more elegant to buy and use.” However, as with earlier disruptors (and our current technology stack) the internet, cloud, and mobile, fintech has the potential to develop beyond its original use-cases and become embedded in everyday business and life. 

He describes fintech’s potential in relation to a trend: “the internet comes along and people rebuild old stuff on it. Then they build brand new stuff with connectivity as a key ingredient.” The internet first developed online versions of businesses and then transitioned to create new functionality and connectivity. The cloud began by hosting accessible software and transitioning to create SaaS products, new applications, and cloud intelligence. The third member of the tech stack, mobile, transitioned from small desktop versions of websites to create entirely new mobile-centric apps like social media, video, maps, and photos. 

Harris argues that fintech is up next. 

Embedding financial services into business models and technology

Harris explains that financial functionality is quickly becoming a native component of both the technology stack (internet, cloud, mobile) and as a business model. For example, financial functions such as payments and lending have embedded themselves into the tech stacks of many businesses today. 

Take Uber, for example. The entire payment transaction takes place within Uber’s software application, making it a smooth and user-friendly experience. As Harris puts it, “having these financial functions integrated with software enables new functionality, leveraging the persistent connection to move beyond transactions to relationships.” 

Having embedded financial services inside a business opens a world of opportunity for making data-driven, smart decisions that will benefit the end-user and the business. It also reduces the risk of payment issues and could lead to increased opportunities to sell, market, and grow.

The benefits of integrating digital payments 

Harris uses Shopify as a great example of a successful ($36 billion) software company that gets most of its revenue from payments. Shopify basically provides highly functioning, integrated shopping cart software to small businesses and e-commerce startups. 

But the trend takes place beyond technology companies. Eight percent of payment card volume in the U.S., Harris states, has moved to an integrated payment, where payments are managed through third-party software companies, such as our own. That number is growing quickly. 

Analysts predict that 40% of the payments industry will move to an embedded model. Harris explains that most financial innovation begins with the evolution of payments. In other words, the fourth platform shift to fintech is still in its infancy but has much potential. 

As a fintech company that digitizes direct payments, VoPay is a proud contributor to advancing fintech to be a fourth layer of the technology stack and of business models cross-industry. Our payment software connects digital enterprises to banking systems to streamline payments and boost experience into the future.