Nyca Partners plans to invest between $10 million and $15 million a year, backing as many as 10 startups every 12 months, Morris told Reuters. Money has already been put into Affirm, Lending Club, CardWorks and Global Analytics.

In a message on its Web site, the firm - whose name marries New York and California - says it will focus on three areas: merchant payment services, alternative credit models, and "new approaches to improve on financial services infrastructure".

Nyca says that technology - big data, smartphones, cloud computing, digital currencies - promises to transform the way financial services are provided. But the promise hasn't yet been realised and "the truth is most of what we do and how we do it is basically the same as in 1994".

VC firms invested $551 million in financial services last year, just 1.9% of all investments. Meanwhile, despite high-profile successes like Lending Club and Square, many ideas fail to get off the ground.

This is because the stakes are higher in financial services than other industries thanks to the regulatory frameworks, high risk of fraud and sticky customers, who are hard to poach.

"Worse, a new company can't disrupt the whole system; every innovation still needs to tie into existing networks with their own strict requirements and hurdles," says Nyca.

The firm argues that this is where it comes into its own, tapping industry knowledge and experience, as well as money, to help firms crack the market.

Morris is currently putting his own money into the fund and has secured three partners who have committed to investing. Former Visa director David Sica has joined Nyca as vice president and ex US treasury department man Ian Samuels is on board as an advisor.