It's going to be 'a critical year' for one of the hottest areas in tech

It is going to be a big year for the booming fintech industry.

Fintech refers to financial technology, and more specifically the rise of startups using technology to take on the financial industry in everything from wealth management to payments.

already one of Wall Street’s buzzwords. And after a year of heavy investment in fintech startups, 2016 is going to be the year that establishment firms start testing their own fintech offerings.

“When we talk to the banks, 2016 is the year of the use case,” said Brian Foran, a partner at Autonomous Research US. “They all say there is something in fintech that we want to roll out. There will be a lot more launches in 2016. Some will be a success, and some will fall by the wayside.”

He cited the rollout of platforms that use algorithms to determine investment allocations, known as robo-advisers, as an example. Elsewhere, big banks are launching mobile-payment apps and experimenting with blockchain technology.

Valuation shakeout

Fintech funding has boomed in recent years, and that’s led to talk of a bubble in valuations. Investors put $12.2 billion into fintech firms in 2014, up from $2.8 billion in 2012, according to BI Intelligence. In the first quarter of 2015 alone there were nearly $3 billion of investments in the sector, according to CB Insights.

Foran said that 52% of respondents to a survey it carried out said that VC valuations in the fintech sector were “bonkers — a lot of the money being invested today will be lost.”

“It is a critical year for the anti-establishment as well,” Foran told Business Insider.

“People are asking if there is a path to get getting paid on this.”

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