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Big banks, insurers embracing the fintech frenzy

While the recent wave of financial technology startups might seem like a passing fad, many established companies are approaching the fledgling ventures with open arms — including the massive financial institutions that these new companies are trying to shake up.

Each of the fintech segments explored in S&P Global Market Intelligence's recently published 2017 US Fintech Landscape has seen investments by incumbents into startups. These provide a cost-effective way to capitalize on modern technology that would be expensive to build from scratch. For instance, many investments in the insurance space have centered around digital brokers that can make the insurance buying process faster and more tailored to the type of coverage the user wants.

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While providing venture capital is a way to dip one's toe into the water, some incumbents have even done outright acquisitions of fintech companies. JPMorgan Chase & Co.'s purchase of WePay Inc. and Navient Corp.'s acquisition of Earnest Operations LLC are recent examples from the payments and digital lending spheres.

Partnerships with fintech companies represent another productive avenue. Banks have increasingly looked to leverage the advanced underwriting technology of digital lenders, which have proven to be reliable sources of non-bank capital in their own right, a topic discussed in our 2017 US Digital Lending Landscape.

Large and small financial institutions have also been making advancements through in-house projects. JPMorgan, Bank of America Corp. and Wells Fargo & Co., for instance, have all seen significant growth in digital and mobile banking usage, as they continue to improve their mobile apps. And some smaller banks are eschewing digital banking solutions from third-party providers in favor of developing their own apps, as discussed in our 2017 US Mobile Banking Landscape.

The 2017 U.S. Fintech Landscape discusses current trends and outlook for the aforementioned insurtech, digital lending, digital banking and payments segments, as well as digital investment management and distributed ledger technology. The outlook for these subsectors differs, with some expected to have break-neck growth and others more modest trajectories.

But a common theme exists across all of them: Incumbents are not sitting on their laurels. They have found ways to embrace the digital disruption, working to make financial services better for consumers while also creating a safer, more efficient financial system.

Click here to read the 2017 US Fintech Landscape. These themes will also be topics of discussion at the upcoming Fintech Intel conference hosted by S&P Global Market Intelligence in New York on Dec. 13. Click here to learn more.