Fintech Overview and Trends2 April 2016

‘Bekkozha Muslimov, Investment Director at Blue Wire Capital

Fintech Conference at Cass Business School – “Investment Landscape in Fintech”

About Blue Wire CapitalFocus:

Portfolio:

Team:

Fintech investments:

About myself:• Extensive experience in M&A advisory and corporate M&A

for FTSE100 company;• MBA from London Business School

Conference Attendance: Leading Indicator

Status QuoInnovation in Financial Services:

ATM in 1960s

Online banking in 1990s

Securitizations

CDOs

Credit Default Swaps

OTC Derivatives

Perfect StormFive conditions for Change:

Loss of trust

Expectations of better

The rise of millennials

New distribution channels shaped by technologies

Regulation conducive to innovation

Loss of Trust

Sources: filings by regulators and other government authorities, data from banks, and estimates of US litigation costs by analysts at KBW

Expectations of Better

Sources: Temkin Group Q3 2013, Consumer Benchmark Survey

The Rise of Millennials84% say they are influenced by user generated content

60% say financial products are not targeted at them

33% say they would not need a bank in five years

Sources: Accenture

New Distribution Channels

Regulation • Systemic failure in banking sector in 2008

• Increased governmental regulation: Dodd-Frank, Volcker, EMIR, Basel III

• Focus on separation of retail and investment banking businesses

• In UK regulation is conducive to innovation:

• PRA (former FSA) launched and dropped some of requirements for new banking entrants and introduced “fast-track” licensing regime

• FCA set up Project Innovate

• The number of registered e-money providers has more than doubled in the last two years from 38 to 79

• A new Payment Systems regulator

• Government set up “New Bank Start-Up Unit”

Death by a thousand cutsWorry less about these competitors

Worry about these emerging peers

Unbundling of a bank

TechnologyPower of Disruptive Technology: Marketplace Lending as an example:

Source: Clay Cristensen Disruptive Innovation Framework

Bank Response

Source: The Pulse of Fintech, KMPG and CB Insights

Acquireo Investments into start-ups

o BBVA acquired Helsinki-based Holvi

Partnero Citigroup partner with Lending club

Co-Opto Barclays set-up incubator run by

Techstars

Competeo Charles Schwab set-up own algo

trading to compete with Wealthfront

Bank Investments into VC-backed fintech start-ups

Global Fintech Financing

Source: The Pulse of Fintech, KMPG and CB Insights

Key Verticals:1. Lending

2. Payments/Billing

3. Personal finance and asset management

4. Money transfer/remittance

5. Blockchain/bitcoin

6. Capital markets

7. Crowdfunding

8. Insurance

Global Largest Fintech Deals

Source: The Pulse of Fintech, KMPG and CB Insights

$7.7B $4.5B$1.5BTotal

14 of Fintech Unicorns in Payments and Lending

Source: The Pulse of Fintech, KMPG and CB Insights

10 Largest European Fintech Rounds

Source: The Pulse of Fintech, KMPG and CB Insights

Top Cities

London - 50 Deals/$744M

Hamburg - 5 Deals/$110M

Berlin – 10 Deals/$79M