5 Fintech Companies to Watch in 2019

Acquisitions, partnerships and the roll-out of various new products and services made 2018 a very active year in banking and fintech. But was it all just setting the scene for an even busier 2019?

Here are Bank Innovation‘s 5 companies to watch this year, selected by editors’ choice, in no particular order:

This payments company made deals left and right and entered into partnership after partnership in 2018, all while seeing substantial growth across numerous lines of business, including at its social P2P app Venmo. Its acquisition in May of Swedish small business commerce platform iZettle (a Square competitor) was its largest purchase to date. Also, is a Bank of PayPal coming soon? While PayPal may not have a banking license, it has been working with different banks to offer certain banking features through its digital wallet. Through its partnership with Barclays Plc, for instance, the bank’s customers can now use PayPal to make credit card payments, view transaction history and balances for their Barclaycard, as well as redeem Barclays rewards points at merchants accepting PayPal. Then came the announcement in December from Swiss banking software provider Temenos that PayPal would be using its Temenos T24 Core Banking platform for several of its businesses around the world. PayPal was pretty mum on the details behind its decision. Simply put, there’s no reason to think 2019 won’t be another headline-making year for this fintech player.

Amazon is making inroads into financial services. Whether it intends to completely take over the banking industry or simply carve out some space for itself through products like its virtual assistant Alexa, which has already integrated with banks like Capital One and U.S. Bank, is yet to be seen. It’s been said that if Amazon were to become a bank, it would immediately be one of the top three in the U.S., stealing its customers mainly from the megabanks. But that’s just speculation. The reality is that Amazon is making moves through agreements with retailers to accept its digital wallet, Amazon Pay, at their point-of-sales terminals, or through its partnership with Western Union to allow international customers to pay in person for online purchases at Western Union locations worldwide. Coming off a year when statements like, “My bank is a technology company” became a common refrain from bank CEOs, perhaps it won’t be long before the tech CEOs start saying, “My technology company is a bank.”

This low-profile unicorn is doing a lot of the heavy lifting in the API space and has some serious growth potential with a $250 million Series C investment announced in December. Plaid essentially builds the infrastructure that allows consumers to access and use their bank account through third-party applications like Venmo, Robinhood, Coinbase or LendingClub. While many consumers interact with the company’s products without even realizing it, investors like VC firm Kleiner Perkins and the venture arms of Citigroup, American Express, Goldman Sachs and Google have had no trouble seeing Plaid’s value. The latest round of funding pushed the San Francisco-based company’s valuation to nearly $2.7 billion, according to reports by CNBC and TechCrunch. Plaid’s co-founders, CEO Zach Perret, and CTO William Hockey said in a blog post on the company’s website that the funding would be used to grow the team and expand operations.

Thought Machine
Eyebrows were undoubtedly raised across the banking industry in December when Lloyds Bank plc announced plans it would deploy a new core from cloud banking provider Thought Machine in 2019. The London-based core-as-a-platform startup also received an £11 million ($14.6 million) investment, worth a 10% stake, from Lloyds. Of course, Thought Machine is not the only company in the core transformation business. More established core processors such as Finastra, Fiserv and Temenos, among others, also offer new cores. Despite the competition, it’s been a good year for Thought Machine, which is also working with British challenger bank Atom. Paul Taylor, CEO and co-founder of Thought Machine, told Bank Innovation in December that his company was in the process of doubling its team over the next year. The company also secured a global implementation partnership deal with IBM, which could open up access to banks around the world. It could also spell a busy 2019 for this growing startup.

Bank of America
Bank of America had a winner in 2018 with the debut of its AI-powered virtual assistant Erica. While virtual assistants are nothing new to the world at large, the possible applications for banking are still in their infancy or yet to be discovered. Erica, which launched in early March, had over 4 million users by November. Since the rollout, BofA has consistently added new features to the service from doing balance checks to providing spend insights. It’s also been a year full of updates for its mobile banking services in general, like allowing users to complete a mortgage application on the bank’s mobile app, or allowing for seamless switching between BofA, Merrill Lynch, Merrill Edge, and U.S. Trust mobile apps without the need to re-authenticate. In its third quarter earnings report, the bank disclosed an impressive 10% YOY increase in its mobile growth to 25.9 million mobile users and 36.2 million digital users overall. But is this just the beginning? Brian Moynihan, chairman and CEO at BofA, said in July that the bank would invest about $500 million in technology through the end of 2019.

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