competitive advantage. Market structure changes brought on by technology, regula- tion, and shifting client needs make it critical for incumbent banks to take action now. In addition, as banks begin to think of themselves more as data and technology companies, they need to start managing their IT stacks, and the data and analytics within them, as assets that can be commercialized. Banks can leverage the experi- ence gained in such areas as execution algorithms, direct-market-access connectivi- ty, and securities services, and explore opportunities for unconventional partner- ships. In order to move forward efficiently and effectively, however, banks must fully grasp the history and scope of the fintech domain. In this report’s analysis of the rapidly evolving CM fintech landscape, we used the Fintech Control Tower pro- prietary database of Expand Research, a BCG subsidiary. The database covers more than 8,000 fintechs. The Fintech Landscape Since the establishment of Instinet as the first electronic communication network in 1969, and the creation of Nasdaq as the first electronic exchange in 1971, there have been three major fintech waves. (See Exhibit 1.) The first occurred mostly in the 1980s and 1990s and featured roughly 100 CM fintechs, predominantly en- Exhibit 1 | Three Major Fintech Waves WAVE 1: TRADITIONAL FINTECHS WAVE 2: FINTECH MILLENNIALS WAVE 3: FINTECH BOOMERS ~19% ~25% ~56% Number of companies founded SETL 60 Orchestrade Development SunGard SmartStream Symphony Intercontinental Exchange Communication Mysis Services Currenex 50 Broadridge Financial Solutions 46 47 45 Bloomberg Ion IHS Markit 38 40 OpenLink 35 Murex Calypso 29 31 30 21 23 19 18 17 15 13 13 15 14 15 10 77 55 4 55 6 333 22 0 1974– 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 1984 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 Sources: CB Insights; DealRoom; Tech in Asia; Expand Research; BCG analysis. Note: The 551 companies included were active as of the first half of 2016. The total includes neither the 16 fintechs that did not disclose founding dates or were founded before 1974 nor the two that were founded in 2016. 4 Fintech in Capital Markets