Two decades ago only a small handful of companies could be defined as ‘fintech.' But as technology has evolved, it has become a much more dynamic industry according to Wellington Management's Bruce Glazer
Over the past decade, the merging of financial and technology services — or fintech as it is known — has transformed the way many financial businesses operate. Not only is fintech helping businesses to enhance customer experiences through the use of digital programs and analytics, it is also improving operating efficiency through the use of modern software applications.
For Wellington Management's Bruce Glazer, who has been investing in the area for more than two decades, the growth in the breadth of opportunity has seen fintech evolve into a standalone investment sector: "When I started investing there was only a small handful of companies that you could define as ‘fintech.' But as technology has evolved, it has become a much more dynamic industry".
"New disruptors of legacy financial service companies have been enabled by the evolution of the internet, the advent of leaps in technology like cloud computing and machine learning, as well as the increased ability to reach a large and growing global middle class in search of new financial services".
Technology and data are key drivers of success for many financial companies today, and this, combined with the fact that the fintech sector remains early in its growth, means it represents an obvious long-term investment proposition. It was with this in mind that Wellington Management launched the Wellington FinTech Fund in October 2018.
The Fund is a way to directly invest in high-growth companies that leverage technology to enhance or disrupt traditional financial services. As the majority of technology infrastructure within financial institutions is still decades old and legacy businesses are only just starting to invest meaningfully in cloud computing and modern software, Glazer expects the technology investment cycle to last years.
Indeed, it could create a decade of growth opportunities for the companies that sell these solutions into the financial services industry in particular. In addition, it is also easy to see why he defines the past few years as having kicked off a "golden age of innovation" in fintech.
What makes the sector even more appealing is the fact that growth opportunities exist across the US, Europe and emerging markets, with each region offering different ways in which fintech disruption will play out.