OVERVIEW OF FINTECH IN 1H’2016:

key numbers and main trends

Vladislav SolodkiyLife.SREDA, Managing Partner

most influentialfintech personsin the world @SlavaSolodkiy

/VladislavSolodkiy35

Life.SREDA I Life.SREDA II AsiaBanking on Blockchain Fund

Moscow Singapore London

2012 2015 20162014

13A new venture fund dedicated to

investing in the blockchain ecosystem

6 6 investments(South East Asia)

Research & Vision

www.

.com

investments successfulexits

Accelerator in Singapore Strategy

Indonesia

Taiwan

SME-lending

& FactoringPOS-managment

system &

tablet based

cash-registers

Online-

acquiring

Online-tra

ding

Online-

lending

P2B-lending

Crowndfunding

& Crowndinvesting

Online-

remittances

PFM&PFP

Insurtech

Middleware

mPOS-acquiring

Online-lending

for students

First BaaS-platform for Asiais very necessary for the future

fintech development

Life.SREDA VC Executive Summary

FundingTotal fintech funding includ-ing activity by angels, corpo-rates, PE firms, mutual funds

and hedge funds hit 1288 with 41% raised by e-com-

merce startups deals vs 1053 with 48% raised in e-com-

merce during the same period last year.

Corporates get more active in local fintech deals.

Corporate participation in European fintech deals rose to almost a quarter in H1’16

from just 8% in Q4’15.

Corporates pursue fewer deals in Asian fintech in

Q1’16. Corporate participa-tion in Asian VC-backed

fintech deals fell to 31% in Q1’16, a 5-quarter low.

Asian share of companies in top financing is growing

steadily

April had the record single funding of $4.5B (Ant Finan-

cial) - $125M was debt

Insurance Tech takes 3 of 10 largest US fintech financings

in the H1’2016.Lending takes 5 of 7 largest

Asian fintech financings in the H1’2016

The global investment in blockchain has exceeded

USD 1 billion in over a thou-sand startups and is expected to increase four-fold by 2019, growing at a CAGR of 250 per

cent

Financial technology market analysis, H1 2016

Investment in Financial technologies,Quarterly ($B)

2.6 2.95 2.74.05 4.1

6.17

3.1

6.78.3

2014 2015 2016

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

Investments in fintechAnnually ($B)

Amount of financing deals& M&A deals (#)

Note/source: Source: Capital IQ, FT Partners, Pitchbook, The Pulse of Fintech, Q1 2016, Global Analysisof Fintech Venture Funding, KPMG InternaIonal and CB Insights (data provided by CB Insights) May 25th, 2016.

Other fintechinvestment ($B)

VC Backed fintechinvestments ($B)

2.2 2.5 2.9

0.3

2011 2012 2013 2014 2015 2016 1H

0.4 1.1

5.5

2.6

5.8

6.8 14.5 12.4

100 99

7182

117

76

121

74

128

93

139

95

109

83

162

111

150

80

114

69

108

59

151

106

128

89

122

82

114

69

103

55

134

93

109

102

Investment tractionin Financial technologies,

Quarterly ($B)

Major banks investmentsGoldman Sachs, CITI, Barclayslead pack of banks in fintech investingin H1 2016

Number of investments to VC-backed Fintech Companies

– in H1 2016

– in H1 2015

Goldman Sachs

Citi groupBarclays

Morgan Stanley

Banco Santander

HSBCCredit Suisse

Mitsubishi UFJ

JP MorganCapital One

BBVAChina Development Bank

Wells FargoSumitomo

PNCBNP Paribas

UBSSberbankDBS Bank

Credit Agricole

StandardChartered

Insurtech takes 3 of 10 largest US fintech financings

Lending takes 4 of 5 largest Asian fintech financings

Blockchain & bitcoinfor the first time presents2 companies in top financing

Asian share of companiesin top financing is growing steadily

Key observationsH1 2016

North America

$1.91Bcompanies

17

$718M

companies

4

Europe

$182M

companies

2

South America

Note/source: Source: Capital IQ, FT Partners, Pitchbook, The Pulse of Fintech, Q1 2016, Global Analysis of Fintech Venture Funding, KPMG International and CB Insights (data provided by CB Insights) May 25th, 2016.

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

Ant Financial

Lu.com

JD Finance

Oscar Health Insurance

Ion Investment

CommonBond

Fenqile

Clover Health

Weidai

Lendup

EDM _Group

XP Inves

Kreditech

Belerment

Fractal Analytics

$4.500M

$1.216M

$1.010M

$400M

$400M

$275M

$235M

$160M

$153M

$150M

$145.1M

$130M

$103M

$100M

$100M

Series B

Series B

n/a

Series C

PE

Late

Series D

Series C

Series C

Series B

n/a

PE

C

Series E

n/a

Payments [4]

Lending [8]

Insurance [3]

Financial BPO[1]

Wealth management/ Capital Markets

[4]

Banking[3]

Big Data[1]

Financialmanagement

[2]

Real Estate[1]

Blockchain[3]

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

Affirm

Anaplan

Opendoor

Bright Health

Tradeshift

Personal Capital

Starling

Digital Asset Holding

Circle

Duanrong

Blockstream

Nubank

Licaifan

Mobikwik

Lendup

$100M

$90M

$80M

$80M

$75M

$75M

$70M

$60M

$60M

$59M

$55M

$52M

$51M

$50M

$50M

Series D

Series E

Series C

Series A

Series D

Series D

Venture

Series A

Series D

Series B

Series A

Series C

Series C

Series C

Series B

30 largest fintech deals of H1 2016 received a financing of $13.31B

$7.22B

companies

7

Asia

The market doubles every year. It is neither good or bad - it is normal

At the moment, I would single out three much more important fintech issues, rather than record volume of deals:

Scalingas little as 30 companies worldwide show that they are able to quickly export their products and services to other countries

medium-sized companies facethe future funding problem.Such companies are already successful in one market and “burn” a lot of money, but in most cases, they are still loss making, and further need either geographical expansion or extension of their product range.

At this stage, neither “cash exit” for founders of acquired services nor acquisition of a readymade business is applicable

Round B problem The growth through M&A

This and the next year the major focus will be on mergers of fintech startups:

They started integrating by themselves on the partnership terms;

So far we have seen quite a few M&A deals but I have no doubt that soon there will be more and more of them;

Cheap&fast customeracquisition,but low margin

High margin, but expensive CP

Cheap&fast customeracquisition

High margin

Better tailoring customer to

More data = low credit risks

Online-trading Online-remittances

Online-bank mPOS

mPOS e-wallets

Online-lending Online bank

Online-lendingOnline bank

Mobile bank Online-remittances

BanksLicensed and regulatedbanking back-ends (belongs to banks in each country in Asia-Pacific region)

based on 40+ universal APIs

100+ fintech-startups

Middlewareprovide for them universal APIs

Fintech-startups do notneed to spend time,money and humanresources to be integratedin each Asian country

Banks do not need tospend their time andmoney to create newAPIs and to communicatewith all startups all over the world

Bank-as-a-service

Ecosystem

Now we see a heavily growing demand from fintech startups for advanced

banking infrastructure to launch and scale faster and more effectively

(Bank-as-a-service)

There are a few BaaS-platforms

(in most countries of the world

none at all), and only a small

number of companies in the

market have open APIs - but it

is already clear that the market

has matured, that without solving

these infrastructure problems

further fintech growth

will be very limited

India

Sri Lanka

Bangladesh

Myanmar

Malaysia

Philippines

Indonesia

Australia

New Zealand

South

Korea

North

Korea

Thailand

Hong Kong

Laos

Cambodia

Singapore

Taiwan

Japan

Bhutan

SME-lending

& FactoringPOS-management

systems &

tablet based

cash-registers

Online-

acquiring

Online-tra

ding

Online-

lending

P2B-lending

Crowdlending&

Crowdinvesting

Online-

remittances

PFM&PFP

Insurtech

Middleware

mPOS-acquiring

Online-lending

for students

First BaaS-platformis very necessary for the

future fintech development

Most importantly, the market starts talking about fintech-bank –

a company, providing not one but dozens

of fitnech product and services

Based on BaaS-platformit would be possible

to create a Fintech-bankwitn Tesla like-UX

Tesla - is not about electric car.It’s about ecosystem ofservices which createsnew user experince.

No dealers(and middle-men),only own showrooms

Worldwide network of chargers

Battery and engine manufacture

Centralised contact-center and technicalsupport

Software&interface manage

your car through tablet

New car insurance forelectric cars based

on big data

Booming fintech trends:

Online-remittancesAlmost all major players successfully raised new funding rounds in the past six months

keep growing at a faster rate

As for social-based remittances, none of the messengers (except WeChat) shows any outstanding performance in terms of turnover and number of clients.

have got second wind and a new growth phase with the support of the British regulator.

e-Wallets Neo- and challenger banks

Booming fintech trends:Explosive growth of

Online- and P2P-loansStudent loans are still popular only in the USA – no other countries have attained such scope and growth rates.

The borderlines between P2B, SME loans and crowdinvesting become gradually erased

and provide a huge and fast-growing field

of alternative SME financing.

Big data and online scoring are growing

fastest in the unbanked markets

The maximum number of new players are thinking in terms of small and medium business loans

Booming fintech trends:

mPOS-acquiring shows that while this business is mostly lossmaking (being low-margin), but it successfully (and at low cost) wins SME customers and generates extensive data on them

Online acquiring is the same low-margin sphere as mPOS, although with a higher profit form lower investments

Online-trading and wealth-managementare often brought down to robo-advisory services, although this is not the case as the industry is much more versatile and interesting

New prospective spheres:

«Fintech for unbanked» solutions

IoT, O2O, big data, chat-bots

Availability of Open APIs to banks and BaaS-platforms is critical for fintech startups, both for the start and further international expansion.

Implementation of the Blockchain technology as real business is curbed by the very blockchain benefit: the technology is developed for mass use and has no use without it.

Insurtech is a relatively new development, it has brought together more than 150 startups

Niche developments:

It is still unclear why mPOS companies fail to develop successful solutions in POS management systems and tablet-based cash-registers, these sectors are so close that they are bound to merge eventually

Crowdfunding will grow into a huge industry, unless it stays only a new version of charity

Personal Financial Management (PFM) has developed as an independent sector only by a small number of companies

Price-comparison and broker-model sites is a gradually dying-out model, despite that some companies keep successfully developing and attracting new rounds

Fintech for SMEs is quite an undervalued sector

All you need to know about Fintechyou can find in a new Life.SREDA’sfintech research “Money of the Future 1H 2016”

www.fintech-research.com