Financial technology, or fintech, is much more than the boom of start-ups that have been appearing on the scene in recent years. In fact, fintech has existed since the early days of slow and tedious dial-up internet connections. Persistence paid off, and several successful fintech companies had been formed by the early 2000s when internet connectivity finally became what it is today – fast, sustainable, and cost-effective.
What is a Fintech Unicorn?
The term ‘fintech unicorn’ was coined back by venture capitalist Aileen Lee in 2013 in an attempt to pinpoint the success rate for such new companies. Thus, a fintech unicorn can be defined as any privately owned start-up fintech company that reached the $1 billion value threshold.
For more insight into the categorization, it’s worth pointing out that the term ‘decacorn’ is alternatively used for companies valued at $10 billion and a ‘hectocorn’ for a fintech company worth at least $100 billion.
Considering the massive funding into these establishments, failed fintech companies have essentially been re-imagined since the initial unsuccessful attempts.
Nowadays, these unicorns are provided with relevant guidance and mentorship. Financial support is available for companies to participate in accelerators and incubators, which provide assistance to start-ups and guide them through the process of becoming a unicorn.
Fintech Unicorns in Major Industries
Understandably so, fintech unicorns are about striking the perfect balance between finance and technology and boosting a number of industries and market segments.
One major industry for these companies is banking. Standard banking institutions use different types of tools and services supplied by the fintech sector to cut costs and increase revenues. An excellent example of a fintech disruption in this market is blockchain. Major banking institutions have managed to use the underlying technology of Bitcoin as an operative, contract, connectivity, or any other type of platform.
Retailers, more specifically, e-commerce was practically born out of this type of innovation. E-commerce giants Amazon and Alibaba are great examples of fintech companies that revolutionized shopping. This ultimately led to the shutdown of brick-and-mortar malls across major markets, since consumers saw great potential in remote, online shopping.
The team at Carsurance additionally point to other marketplaces and business segments – lending, insurance, artificial intelligence, and software as a service model – that are heavily influenced by the top fintech companies.
What Will Become of Them?
While the mythical unicorn was never to be heard from again, projections for fintech unicorns are much more positive. Widely available funding opportunities such as direct investments, buy-outs, or support are expected to bring results in much less than the two decades it took to get this far.