Microsoft Has an Eye on FinTech

February 12, 2016     By : Sofia

What an exciting time we all live in—the bank is not somewhere you go anymore, it’s something you do. The lines between financial institutions and tech companies have completely disappeared; incomprehensible opportunities have been unleashed by technology, changing our financial lives and behavior forever. We have seen tech companies sliding into finances with such a passion and hunger that it won’t be surprising to witness the launch of the digital-only Google Bank.

Unfortunately for banks, the monopoly on financial services has been abolished almost completely. Tech mammoths like Google and Microsoft are actively exploring opportunities in the financial industry through their investment arms. While Google is a little behind on blockchain, Microsoft has an established leadership in research on the blockchain application. The number of Microsoft initiatives in FinTech may surprise one as the company is not rushing to speak up.

The company is so deeply rooted at the back-end of financial institutions that in the nearest future, it will consolidate enough knowledge and networks to launch a proprietary financial product that could make a significant impact on the industry.

One of the interesting partnerships revealed last year was with Nucleus Software, the leading provider of lending and transaction banking solutions to the global financial services industry. As a result of the partnership, the companies are aiming to deliver the latest version of the best-selling lending software in the world, FinnOne Neo, on Microsoft Azure.

In 2014, Microsoft announced a partnership with FS-ISAC to fight against cybercrime in the financial industry. The company joined hands with the Financial Services Information Sharing and Analysis Center (FS-ISAC), the global financial industry’s resource for cyber and physical threat intelligence analysis and sharing. Microsoft piloted the Cyber Threat Intelligence Program available to participating FS-ISAC members, which were able to receive near-real-time information on known malware infections affecting more than 67 million unique IP addresses.

There are many more interesting initiatives that Microsoft has taken up in FinTech. This time, our focus will be on the investment activities Microsoft Ventures is involved in as they shed more light on the “secretive” nature of the company that is building a FinTech machine within its tech body.

microsoft fintech investments portfolio

In total, Microsoft has invested in close to 400 companies with the heaviest focus on Games & Entertainment (10%), Retail (7%), Healthcare (7%), Cloud (5%), EduTech (5%) and Big Data (5%). Even though only 3% of companies in the portfolio are classified as FinTech, the proportion is significantly bigger as the lines between segments have become blurred and Big Data, Cybersecurity and Mobile Application companies are very closely tied to FinTech.

microsoft fintech investments portfolio

The variety of FinTech startups demonstrates Microsoft’s clear interest in the industry. Such notable players as Suade and Cringle are in the investment portfolio.

microsoft fintech investments portfolio

The ones following Microsoft’s activities in FinTech are familiar with the range of the company’s interests. However, the tech giant is one of the interesting cases of “strong, silent type” of companies that doesn’t declare its initiatives loudly. However, in the nearest future, Microsoft may surprise the community of professionals with a disruptive product or solution it could be developing while getting its venture arm into promising startups.

Here are some of the FinTech companies Microsoft has invested in:

Suade is building an open platform for financial regulation.

CityFALCON creates a level-playing field in financial news for all investors. They source and collate financial big data, and then, using the power of social media and crowd curation, provide a comprehensive and timely resource for investors.

Established in 2011, 91JinRong offers users a safe online platform for loans, credit card, insurance and wealth management products. It has offices in Beijing, Shanghai, and Guangzhou, providing services in a total of 87 cities in China.

Cringle is a practical solution in which friends can share expenses through their phones without the hassle of handling change.

IDOS helps companies avoid errors in accounting and compliance by simplifying transaction processing.

An online only-bank, MYbank is poised to challenge China’s state-owned banks with its 100% digital, branchless banking operation that will serve customers 24 hours a day.

Myriada enables groups of experts to forecast any price, rate or indicator with extraordinary accuracy.

RealtyMogul is an online marketplace for real estate, connecting borrowers and sponsors to capital from accredited and institutional investors.

Stock Radar is a stock-analyzing application that provides stock market-related information.

It is worth mentioning the non-investment activities of Microsoft in FinTech. Lately, the corporation has been involved in partnerships with various companies working in blockchain. Here are the blockchain startups Microsoft revealed partnerships with, including comments on the role of each company:

MultiChain: Rapidly design, deploy and operate distributed ledgers.

Netki: Designs enterprise-grade solutions promoting scalability, security and ease of use for blockchain-based products. The Netki Wallet Name Service is an open standard that makes it easy to send digital currency between users or services, interconnecting the entire ecosystem. WNS is designed to allow service providers to easily register wallet names on their client’s behalf, such as “username.company.com,” or for end-users to register their own vanity names such as “personalname.me” linking them directly to a wallet address.

Emercoin: A leading digital currency and blockchain platform focusing on innovative, scalable enterprise services. The Emercoin blockchain will offer Azure clients solutions for network security, e-commerce, advertising, business contacts, ownership and identity management.

Eris: Eris is a universal blockchain platform capable of running any client for a public blockchain and any client for a permissioned blockchain which is open-sourced. The Eris platform greatly reduces the complexity of creating blockchain-based applications and integrates multiple blockchains, distributed file storage, and other distributed systems into a cohesive application. Eris also makes it simple and easy for your organization to get started using permissible, smart contract-capable blockchains.

CoinPrism: Now deploys the Version 0.5 of OpenChain which was released in early January, and supports high availability, disaster recovery and business continuity through a new Microsoft SQL Server storage back-end.

BitPay: Bitcore, a complete set of bitcoin utilities for CentOS, Red Hat Enterprise Linux and Fedora Linux. Also, a full bitcoin node that’s 100% compatible with the bitcoin core code base and comprehensive Node.js language libraries for extension of the core bitcoin functionality.

One of the most interesting parts of Microsoft’s investments habit is that the company has a particular interest in Chinese startups. Around 25% of ventures Microsoft has invested in are from China and around 18% are from India. Microsoft is clearly looking to leverage the most massive consumer markets. Given that India’s FinTech is on the rise, Microsoft chose the best time to swoop in. Needless to say, China’s consumer market itself can be a growth accelerator for any startup.

Save

Sofia

Sofia is a contributing writer for LTP based in New York. She is a market research professional skilled in data analysis and visualization. Sofia has an extensive experience in consumer behavior studies and marketing analytics. She is passionate about disruptive startups with innovative business models that are having a powerful impact on the industries.

If you have any suggestions or questions for the author, please email us at follow@letstalkpayments.com