Today, SmartUp launches its FinTech learning series, in collaboration with Founders Forum.

Giving you key learning about the inner workings of top FinTech innovators — and testing your knowledge with challenging quizzes!

It’s innovative. It’s fast developing. It’s widely seen as deeply disruptive to banking and finance, across sectors and services.

But what exactly is FinTech? Who are its key players, and how does the tech behind their startups really work?

From payments to the bond market, stock trading to mobile-based banking, to Bitcoin and the blockchain — we’ll survey FinTech through more than a dozen case studies.

Let’s get started! Here, we begin by pin-pointing 10 essential FinTech features and trends…

… and we hear from some of the sector’s luminaries, and future stars.

FINTECH IS VAST

On the surface, FinTech is a label. It loosely covers innovation in financial services — or how technology is changing traditional banking and finance by replacing, complementing, reinventing or reinvigorating the methods and models used by banks and financial institutions.

That’s broad — and so are FinTech’s sectors. There are innovations in mobile payments, transfers and cryptocurrencies, lending and trading, peer-to-peer networking and crowdfunding, credit and micro-finance. There are new forms of insurance and risk management, and advances in analytics and big data.

More startups are joining the FinTech fray, each year — in what, since 2008, has been described as a “perfect storm.”

THE PERFECT STORM — SAMIR DESAI, FUNDING CIRCLE

“The crisis was definitely a catalyst within the financial services sector,” says Samir Desai.

Samir is one of the founders of Funding Circle, which connects borrowers and lenders in a marketplace of loans for small- and medium-sized businesses.

“Before the crisis, although no one had really liked banks, people trusted banks,” he says. “And the financial crisis meant they stopped trusting them.

Banks massively overstretched themselves and required government help. Banks are much more risk averse and much more regulated, so that sucked capital out of the market. It was a perfect storm.”

FINTECH CAN BE DISRUPTIVE

FinTech innovators have taken two discernible, if not fully distinct paths — between disrupting and enabling. At its most disruptive, FinTech questions the very need for established financial systems and institutions — and attempts to bypass or disintermediate these. This can be open, and brazen.

For example, TransferWise’s relationship with traditional banks is confrontational. The international P2P money transfer startup rallied an army of disrobing demonstrators for its “Nothing to hide” campaign.

It also runs poster adverts that use currency symbols to barely disguise the expletive-ridden copy used to express, by proxy, consumer frustration with transfer rates.

CRISIS, CHANGE AND OPPORTUNITY — TAAVET HINRIKUS, TRANSFERWISE

“The trust thing is very important — and the banks lost a lot of it during the crisis,” says Transferwise’s co-founder, Taavet Hinrikus.

“Without the banking crisis, I don’t think FinTech would be as far along as it is.”

At least in part, FinTech bets on the crisis as an echoing death knell for the traditional banking model.

“Are banks going to be around in ten years time? There’s no need for them,” suggests Hinrikus. “You can get a loan through Funding Circle, you can do payments with TransferWise.” What about cash? “There will be no need for cash. You will pay with your phone.”

FINTECH ALSO HELPS BANKS THROUGH DISRUPTION

But FinTech is also enabling established banks and financial institutions navigate, incorporate and take advantage of this disruption. In our FinTech series, we look at how startups are helping to build efficiency in bonds trading, cut risk in small-claims insurance, and connect banks to the blockchain.

Formal startup-bank partnerships are also emerging — including with the most-disruptive Transferwise.

And Funding Circle — which once ran advertising copy that read, “No thanks, banks” — partnered with Santander in 2014, with a “signposting agreement.” It was that a significant moment for the retail banking world — a major bank substantiated the peer-to-peer industry.

Funding Circle’s Desai believes that even if banks will become less relevant, “there’s always going to be a place for banks — just in the same way that there’s always a place for offline stores.”

FINTECH, LEGACY — AND PITCHING TO REPLACE OLD WITH NEW

Banks and FinTech startups have found some common ground — and a certain symbiosis. FinTech innovators are helping established financial players to go beyond the restrictions of their legacy systems, and integrate startup thinking and methods into their business plan and practices.

Meanwhile, banks and financial institutions are supporting startup innovation. DBS, Barclays, SWIFT, Visa, Santander and Accenture have set up incubators and accelerators, while BBVA and American Express have launched venture capital funds. FinTech thrives in a financial post-crisis landscape in which all sides need and seek innovation.

BANKS, TECH AND TRANSITIONS — RAJA PALANIAPPAN, ORIGIN

“Ten years ago, we would stand no chance,” says Raja Palaniappan.

Raja is the co-founder of the bond trading platform Origin, which passed through Barclays’ Techstars-powered Accelerator.

“The banks had unlimited capital, could hire the best developers, and win the best clients with their balance sheet. They worked with carte blanche.

These days, they’re handcuffed. Capital is so expensive, they’re spending all their time on regulation. Their technology infrastructure is outdated.

We were speaking to a major bank and they said, ‘We have 50k employees, roughly 1/3 are IT. We’re not supposed to be a software company, we’re not good at software. We’re good at capital.’

Banks are in a phase of restructuring and business model realignment. They realize that they have core competencies — financial expertise, capital, financial structuring…

And the things that they’re not good at, they should be outsourcing or partnering. Technology is a big part of that.”

FINTECH RE-ROUTES, SIMPLIFIES, DEMYSTIFIES

Let’s take a look at some of the things that most, if not all, FinTech innovation has in common. First, FinTech either innovates to re-route, simplify, or demystify finance. And often, all three.

In our SmartUp FinTech series, we’ll see how the crowdsourcing of lending and insurance re-routes risk and changes the relationships between lenders and borrowers, the insurer and the insured.

We’ll explore how new investment startups are demystifying stock and index fund trading — and attracting a new demographic of investors to the markets.

And we’ll discover how, even within the established financial industry, FinTech startups are decluttering and streamlining existing systems and processes.

FINTECH LAYERS INNOVATION

When FinTech is consumer-facing, it often layers innovation and combines services in new ways. We’ll examine how GoHenry builds parental lessons about saving onto its prepaid payment card service.

We’ll look at how Robinhood adds crowdsourced investment advice to its micro-investment app stocks app, and how Acorns allies saving with investing.

And we’ll examine how Velocity is a restaurant guide with a mobile payment option — but also a full analytics suite.

FINTECH’S FIN MAY BE THE TIP OF THE ICEBERG

At first, many FinTech startups seem evidently simple. It’s an app. A website. A clever and quick solution to a pressing pain point, for the financial industry or the general public. Look deeper, and these startups are new-tech versions of traditional financial enterprise. They’re stock or insurance broker-dealers, presenting themselves through mobile micro-services, or crowdsourcing platforms. They’re payment providers or intermediaries, appearing as 1-click online solutions, or within guides to shops and restaurants.

Understanding these FinTech innovators more deeply is key to seeing the trajectory and potential of their innovation-driven advances, in both finance and technology.

FINTECH IS DOUBLE-DRIVEN — RAJA PALANIAPPAN, FOUNDER, ORIGIN

“FinTech is not just a tech-driven trend,” says Origin’s Raja Palaniappan.

“It’s also a finance-driven trend. Finance itself is changing. The constraints put on banks are changing.

And so the way the incumbents operate, and how they provide services, their own access to capital, the cost of the capital for them, and the capital that they can give to their clients… all of that is changing.

The existing market structures are changing as well, and this allows technology to create a new market structure — or at least try to create a new market structure.

But it’s not technology itself that is able to do it — you need both the changing financial landscape and new technology, you have to put them together for it to work.”

FINTECH IS EXPANDING AND DEVELOPING

Last year, Accenture reported that global FinTech investment had tripled from 2013 to 2014, from $4.05B billion to $12.2B — a trend that continues.

Europe has been the fastest-growing FinTech region, with the City of London (Fin) and the British capital’s Silicon Roundabout (Tech) coming together in what might be dubbed London’s “Square Mile and a half.”

U.S.-based startups still draw the most investment — and Lending Club, now the world’s biggest lending marketplace, is a product of Silicon Valley.

But FinTech is decidedly global — and Asia is coming up strong, through startups like Fastacash, m-daq, and Lenddo.

Check out more content on SmartUp!

An app for startups, entrepreneurs and innovators everywhere to learn, get inspired and connect. You can also see what we’re up to on Twitter, Facebook & Instagram!