Financial services is on fire! Last week, it was listed as one of the fastest-growing industries on the Inc. 5000 for 2015, a big gain after barely breaking the top 20 last year.
Inc. Magazine’s annual list of the fastest-growing private U.S. companies highlights which companies, industries and business models are seeing meaningful traction. The insights from this list sit somewhere between venture capitalists’ long term pontifications and macroeconomic reports that act as lagging indicators.
Combined, financial services represents the fourth fastest-growing industry on the Inc. 5000, with an aggregate growth rate of 166%, barely inching out software, the fifth-placed industry. This is quite an improvement from last year, when financial services came in at a paltry 19th and software came in third.
Interestingly, of the 24 financial companies with over 1,000% three-year growth rates, nearly half are in the lending business. Most of these help small businesses find financing in new ways — like Kabbage, which uses many data sources (including online sales) to underwrite loan applicants. Some of the top 24 are consumer-facing lenders: Crest Financial, Prosper, and ZestFinance. Many business and consumer lending companies on this list seem to be going after customers who may not have traditional financing options.
Westlake Financial, an acquirer and servicer of prime and subprime installment auto loans with $619M of 2014 revenue, was the largest financial services company by revenue. CFSI’s annual market sizing report highlighted the growth in subprime auto loans.
Inc. also called fintech one of the most promising industries in a recent post. For those following the industry, the news that financial services is experiencing new growth may not come as a surprise. This is likely partially due to the quadrupling of fintech investment last year.
It’s worth putting all this into perspective, though. The combined revenue of the 314 financial services and insurance companies on the Inc. 5000 list is $15.7 billion. While this seems large, it makes up less than 1% of the industry’s gross output.
Innovation from new entrants may be growing, but incumbents still take home the lion’s share of money in this industry.
Check out the full list of companies and commentary here.
How can you keep up with the latest?
- Stay engaged with the FinTech community. Join the Financial Solutions Lab email list and get regular access to the latest insights in innovation and be among the first to learn about the Lab’s next challenge!
- Sign up for our September webinar on fintech trends: Emerging Fintech Trends that Drive Positive Consumer Outcomes.