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Major U.S. Banks Put Faith in Fintech

It’s only the second month of 2018, and already the volume of news surrounding cryptocurrency, blockchain and AI has seemingly reached full saturation. Despite the overwhelming interest – among both casual observers and high level investors – in these burgeoning industries, a new report by American research firm CB Insights shows that financial technology remains the top tech sector of interest to many major bank portfolios.

The report shows that American banks are diversely invested in the fintech sector. Goldman Sachs is number one on the list of big banks with fintech holdings, with 27 fintechs comprising part of their portfolio, while JPMorgan Chase has 14; Wells Fargo and Morgan Stanley both have nine and Bank of America has only six.

The chart below (provided by CB Insights) breaks down the fintech portfolios of the top ten U.S. banks.

Of the many fintech firms being held in these portfolios, personal finance and lending-focused applications of fintech seem to be of particular interest to banks. Some of these have included Nav, Better Mortgage, Neyber, and FinanceIt.

The relationship between fintechs and major banks is intuitively based on business objectives. Many banks want to invest in technology that will help them improve the speed, volume, size and efficiency of lending transactions, and to open those transactions to a wider pool of customers. Trends like this one show that previously held views of fintechs as the small, agile successor to big bank “dinosaurs” may be on their way toward obsolescence.

 

 

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