The Top 11 Fintech Disruptors of 2021

Profiles of the digital innovators with great potential to impact the strategies of banks and credit unions – some as competitors, some as partners, all as examples of app- and API-based finance.

Fintech has greatly changed everyday life for billions of consumers around the world over the last decade-plus. It’s changed the way we buy goods, pay other people, invest, bank, obtain mortgages and so much more. That’s why it was not very surprising to see so many fintech firms named among CNBC’s annual Disruptor 50 list.

Despite having reaching the status — by years — of a mature industry, fintech still continues to produce innovations and change the way people interact with their finances. With that in mind, here’s a look at the 11 companies that made it onto the CNBC list.

Some are well established, some relative newcomers making a big splash that you may not know about. All are important for bank and credit union executives to watch closely. They point the way in which financial services is continuing to evolve and in several cases have built their businesses around working with traditional institutions.

Robinhood logo

Tool for Everyday Investors (and Lightning Rod for Critics)

Robinhood has certainly had a noteworthy 2021 so far, hasn’t it? The financial app that aimed to democratize investing for everyday people fueled the Gamestop trading mania that began earlier this year. Eventually it temporarily halted trades on Gamestop and other meme stocks, which earned it the anger of its users and also somehow managed to unite politicians as diametrically opposed as Rand Paul and Alexandra Ocasio-Cortez behind a common cause.

Since then, things have calmed down a bit for the fintech, valued at nearly $12 billion, and it is planning a highly anticipated IPO in July. Since it debuted in 2013, Robinhood has created numerous innovations in the investing space, such as commission free trading. It was also one of the first platforms too enable the trading of cryptocurrencies, in 2018.

Critics have hit out at the platform’s gamification of trading, and say it encourages possible bad behavior by making trading too easy. Still, with an IPO looming on the horizon, 2021 could be Robinhood’s biggest year yet.

Stripe logo

E-Commerce Engine

Launched in 2010 by Irish brothers John and Patrick Collison, Stripe has in many ways become the infrastructure that powers online commerce. Stripe provides APIs that developers can use to integrate payments processing into online e-commerce sites or apps. And millions do, including digital commerce giants such as Amazon, Reddit, Spotify, Lyft and more.

In 2019, the company branched out to physical point-of-sale services with its Terminal product, designed to enable physical card readers to work with Stripe’s infrastructure. It also has created services for online businesses to manage invoices as well as recurring revenue such as subscriptions.

( Dig Deeper: Is Stripe’s Lending and Payments Platform Move the Future of Banking? )

The past year has seen Stripe launch a banking-as-a-service platform that enables its users to embed financial services, allowing their customers to easily send, receive and store funds as well as expand overseas. Valued at a whopping $95 billion, Stripe has no stated plans to go public, but industry insiders expect that will happen in the next several years.

Key Takeaway:

Stripe, one of the highest valued fintechs at $95 billion, has no immediate plans to launch an IPO.

Brex logo

Lender to Startups

A relative newcomer, Brex was launched in 2017 and provides lending services to startup companies. Since many startups go bust within the first year or two of their existence, notably restaurants, this theoretically puts Brex in a high-risk business where many of its clients may not be able to repay loans. In fact, co-founder Henrique Dubregas has told CNBC he expects nearly three-quarters of Brex customers to go out of business every few years. The company counters this risk by using real-time data in the underwriting process.

“It does not require a Social Security number, a personal guarantee, or access to the founder’s credit score. It does, however, require card holders to link their bank account, and Brex utilizes information about the bank account balance as a primary underwriting input,” according to a Harvard Business School review of the platform. The fintech lender partners with Finicity to integrate with thousands of U.S. banks and also to ensure that consumer information is encrypted.

In February 2021, Brex formally applied for a bank charter, with the aim of providing a wider array of financial services to small-to-medium sized businesses. Brex has a current valuation of $7.4 billion.

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Checkout.com logo

Digital Payments Platform

London-based Checkout.com offers payments services to online businesses, and competes generally in the space as Stripe and other providers of payments services for digital commerce. The company made news in 2019 when it announced a $230 million Series A funding round, and raised another $450 million during a Series C funding round in 2021. It has a current valuation of more than $15 billion, making one of the most valuable fintechs in the world.

It has used that newfound financial muscle to expand, notably acquiring Australian payments startup Pin Payments for an undisclosed sum and data analytics platform ProcessOut for $230 million, both in 2020. The company has more than 1,000 employees across 17 offices globally. While still private, Checkout.com is currently exploring a U.S. listing.

Marqeta logo

Big In Virtual Cards

Oakland, Calif.-based Marqeta has had a notable past 12 months. Marqeta enables companies to offer business credit cards to employees and enables e-commerce companies to offer card or other digital payments. It also provides payment-processing services.

During the pandemic, when most employees were sitting at home, Marqeta announced a partnership with JP Morgan to issue virtual credit cards. These would replace physical corporate cards and instead work with various mobile wallets, such as Apple Pay. Virtual cards can be managed digitally, with adjustable spending parameters and restrictions on where employees can pay.

On June 8, Marqeta underwent a highly anticipated IPO, pricing its shares at $27 per share, and began trading on the Nasdaq the following day.

( Key Resource: Neobank Tracker: The World’s Biggest Database of Digital-Only Banks )

Chime logo

The ‘Nonbank’ Neobank

Neobank Chime has grown to become one of the biggest names in the fintech space since its launch in 2013. It introduced several innovations aimed at attracting younger, low-to-mid earning consumers, such as no overdraft fees and the option for early access to paychecks that are direct deposited.

Many digital-only neobanks like to position themselves as tech companies first and banks second, but Chime has been particularly notable on that front, often calling itself a consumer software company rather than a financial institution. In fact, Chime has agreed to stop calling itself a bank after the California Department of Financial Protection and Innovation required it to stop, since it does not have a banking license. (Chime relies on two financial institutions including The Bancorp Bank and Stride Bank to provide insured accounts and a debit card.)

( Dig Deeper: Is Challenger Bank Chime the Future of Retail Banking? )

Regardless of nomenclature, Chime has become the largest U.S. based neobank, with a valuation of nearly $15 billion and 12 million customers. Chime also this year signed the biggest commercial office lease in San Francisco since the pandemic started, taking 200,000 square feet in a financial district tower. Chime has plans for an IPO, according to Reuters.

Tala logo

Data-Driven Micro-Lender

Banking the unbanked and serving those with no formal credit history are issues that have moved to the forefront in recent years. California-based TALA aims to fill that void, which many traditional institutions struggle with. The company provides micro-loans of up to $500 to people in Mexico, India, Kenya and the Philippines.

Catering to an underserved demographic, most of Tala’s customers have no credit score or banking relationship. The company uses advanced data science to build a “modern credit infrastructure from scratch.” It uses behavioral and other alternative data signals to underwrite customers and says it can deliver an approval and money within ten minutes.

“Their credit worthiness is difficult to ascertain, but they have a tremendous amount of purchasing power and potential to harness,” founder Shivani Siroya told VentureBeat last year. TALA is currently valued at $516 million.

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Bestow logo

Insuretech Star

Insuretech may not be as “hot” a market as fintech, but there are several disruptive companies in that space. The one that made the CNBC list is Dallas-based Bestow, which aims to revolutionize life insurance and make it easier for consumers to obtain policies.

Founded in 2016, Bestow’s goal is to disrupt the normally lengthy and paper-intensive process of obtaining life insurance. Customers can sign up digitally, and the company says it can deliver a quote within minutes.

Bestow is clearly seeking customers new to life insurance who may have been intimidated by the process in the past or who are at an age where they are first starting to think about it. The company says 85% of its customers are new to life insurance, and stresses that policies can be obtained without a doctor’s visit, phone screening or other steps that often hinder many from completing the life insurance process, according to Dallas Innovates. Bestow has raised $145 million across several funding rounds to date.

Ripple logo

Big Blockchain and Crypto Player

Ripple set out to revolutionize cross-border payments, and so far has made considerable strides in that regard. Ripple has two major business units is operates: a cryptocurrency it developed (XRP) and a payment protocol that currently connects more than 200 banks across the globe and uses blockchain technology to power cross-border payments. The latter has been seen by many as a faster and more efficient method for cross-border settlements than longtime incumbent Swift. However, even if Ripple execs told Global Trade Review they are not trying to be a replacement for the Swift network.

In December 2020, the U.S. Securities and Exchange Commission charged Ripple’s two co-founders with violating investor protection laws, saying they had raised more than $1.3 billion through an unregistered securities offering through sales of XRP. Ripple has countered that, stating XRP is a currency rather than a security. It remains to be seen how this legal battle will affect Ripple’s future relationship with banks, as well as its native cryptocurrency.

Key Fact:

Ripple is currently in a legal fight with the SEC that could affect its native cryptocurrency and partnerships with banks.

Plaid logo

All About Data Connections

Plaid is one fintech the general consumer may not have heard of, but nonetheless relies on the company’s technology often in their everyday lives. Plaid’s platform uses APIs to connect hugely popular apps such as Venmo, Robinhood, Acorns, SoFi and many more to bank accounts. It also enables many of the popular budgeting and PFM apps to connect with user bank accounts. As such, millions of consumers rely on it to power their daily financial lives on the back end.

Plaid has also attracted a lot of interest from established global financial institutions, with prior investment rounds backed by the likes of Goldman Sachs, Visa, Mastercard and Citi. In early 2020, Plaid announced it would be acquired by Visa for $5.3 billion; however the U.S, Department of Justice sought to block the deal, saying it would create a monopoly. The deal has since been called off. Plaid is currently valued at over $13 billion.

Nubank logo

Nubank: Brazilian Powerhouse

Brazil-based Nubank is the biggest challenger bank you’ve never heard of. The company, valued at $25 billion, has 34 million customers across South and Central America and Mexico, significantly more than many of its neobank competitors.

Nubank started life in 2013 with a single credit card product and has grown to now offer digital bank accounts and personal loans. It made several acquisitions in 2020 to help accelerate its growth, including software engineering firms Platformaetc and Cognitect, and brokerage platform Easynvest. In the past year it has expanded its platform to include services such as distributing government aid designated for the Covid-19 pandemic and offering a life insurance product.

Nubank’s success has led to much attention from some heavy hitters. This month it announced a massive $750 million funding round, with $500 million from Berkshire Hathaway.

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