Tech startups are coming after traditionally stodgy areas of the financial services industry—and they’re bringing lots of venture capital with them.
According to a new report from research firm CB Insights, investments in digital-banking startups are expected to hit $6.9 billion by the end of 2015, more than triple the amount invested in 2014.
The increase in funding for digital-banking startups illustrates a growing interest in using technology to make financial services cheaper, more efficient, and more accessible for consumers. Services like retail payments, wealth management, and lending have attracted tech giants such as Apple and Google, as well as startups like robo-advisor Betterment, which raised $60 million in February, and SoFi, an alternative lender that completed a $1 billion funding round in August.
Most of the financial backing for these startups has been coming from Silicon Valley venture firms, but major financial institutions are “not standing idly by,” according to a recent report from credit-rating firm Standard & Poor’s.
Banks “are starting to collaborate and engage by acquiring or partnering with Fintech companies, setting up venture funds to invest in them, and incubating or launching their own digital finance companies,” S&P analysts wrote.
CB Insights says there have been 144 deals in the digital-banking space this year, up from only 24 in 2010.