Read our beginners’ guide on FinTech.
Show me the money
Spoiler alert: FinTech has nothing to do with fish. Or sharks.
It’s technology relating to financial services, and it’s one of the fastest growing tech sectors. Here’s what you need to know…
What is FinTech?
FinTech is short for financial tech. It refers to any technology that can be applied to the following areas:
- Banking
- Payments
- Investments
- Infrastructure
- Insurance
The term FinTech can be applied to any innovation in the way people conduct business and finance. It can be a complete product, like an app or online banking platform, or a small part of something larger, like a piece of software.
The FinTech market is growing fast. Around $20 billion was invested in FinTech in 2015: that’s 66% more than was invested the previous year. Consumer interest in FinTech is growing too. Google searches for ‘FinTech’ have been climbing steadily, reaching their peak in November 2016.
Is your FinTech business thinking about PR? Tell us about your PR goals to find out how we can help.
Why is FinTech so popular?
The initial interest in FinTech is widely attributed to the 2008 financial crisis. The problems stemmed from risky spending and investment on the part of the world’s banks, leaving public trust in financial institutions at an all time low.
With consumers seeking alternative means of managing their money, and banks desperate to curry public favour, this left the door open for FinTech. Chris Myers of Forbes puts it rather nicely:
“This fear is a powerful motivator, and it is certainly helping FinTech companies get their foot in the door of banks. Fear of massive disruption is largely unfounded, but banks are wise to fear the effect of innovators nibbling away at specific elements of their business. This sense of concern and anxiety on behalf of the banks represents an opportunity for incremental innovation in a staid industry.”
Both startups and corporates are innovating in FinTech. Startups are innovating to provide the financial solutions that the public want, and corporates are innovating because they’re scared of being left behind.
Another reason FinTech is so popular is the growing financial independence of the millennial generation. As a cohort that has been familiar with tech for their whole lives, they want their banking to be as digital as any of their other commodity services. Unlike their predecessors – the boomers – they have no qualms about a lack of face-to-face interaction. They also have financial assets than their parents’ generation, so they want to be sure they’re making the most of it.
What are the benefits of FinTech?
FinTech has the potential to benefit both consumers and businesses. Like all tech, the benefits you reap depend on how you use it, but here’s a taste of what FinTech can bring:
Like all tech, the benefits you reap depend on how you use it, but on the whole, FinTech can deliver slicker and quicker financial services. It also help make banking, saving, and payment more accessible. For example, online and mobile banking eradicates the need for customers to go into a physical branch of their bank, while apps such as Moneybox and Mint make saving and investing easier to understand. It can help eradicate the elitism of being financially savvy.
One particular aspect of FinTech that can help make financial services more secure is blockchain. Digital currency bitcoin relies on blockchain to perform its financial transactions, but it can do so much more than this. Blockchain is incredibly secure, so it is perfect for recording financial transactions and preventing fraudulent activity.
Can you give me some examples of FinTech?
As we mentioned earlier, FinTech is becoming increasingly common: you probably use an aspect of it everyday without even realising. We’ll look at some of the more simple ways FinTech is impacting our lives, first for consumers then for businesses.
Atom is the UK’s first digital-only bank. It has no branches and no call centre; just a website and app through wich customers can speak to the team of 30 financial advisers. The bank started with just a range of savings accounts, but now offers consumer mortgages too. They plan to launch current accounts later this year.
Online investment management service, Nutmeg, makes it easy for customers to try their hand at managing an investment portfolio. In fact, Nutmeg does all the hard work for you. Co-founder, Nick Hungerford, left his job as a stockbroker to start Nutmeg, because he was frustrated by the elitism of the broking world- proof that FinTech really is for everyone.
Curve offers a solution to those whose wallets are overrun with multiple bank cards: an app that links all your bank cards to just one Curve MasterCard. It can even be used all over the world.
For businesses looking for a Fintech solution, Duedil is an online platform that can help with due diligence research, linking to financial data for thousands of other businesses. Seedrs is an online platform that connects businesses seeking investment, with individuals looking to invest. It can be used by anyone, so you needn’t be a seasoned entrepreneur to invest in the next big startup success story.
The future of FinTech
As you can see, FinTech enterprises come in all shapes and sizes.
As our society becomes increasingly digitised, we expect to see physical money eventually phased out, and FinTech simply become the norm in financial services. Although, we will miss receiving birthday cards with cash in…
What are your predictions for the future of FinTech? Let us know on Twitter.
