Financial Technology companies, also known as ‘fintechs’ are growing at an incredible rate, and have been doing for some time now. This is not just a trend which is apparent in Silicon Valley or London, it’s gone global with companies aiming to revolutionise and modernise financial planning and spending appearing all over the planet. There is an enormous range of thing a fintech company can specialise in. For example, crowdfunding websites like the popular Kickstarter that has been used to get numerous start-ups off the ground. There are also peer-to-peer lending fintechs, as well as those for digital currency such as bitcoin, and cyber security businesses like IDGate. They also branch out into less familiar territory, for instance algorithmic asset management, thematic investing, credit scoring, working capital management and even quantum computing.
Most businesses deal with things we can wrap our heads around, but the aims of many fintechs would pass right over the head of the layman. If you’re exceptionally technologically capable, ambitious and confident then a fintech company may well be where you find yourself!
Recent times have given hardworking and determined individuals the opportunity to start businesses that develop apps, software, financial plans and lending systems. Some of these have grown so large in the last decade that established and powerful banks have had no choice but to take notice and realise that they’re no longer the only big players in the financial game. Countless large companies, for example cash loans website Wonga have grown into industry giants.
Research carried out last year showed that investment in fintechs grew from £2.7 billion in 2013, to £8.2 billion in 2014, a quite staggering difference and one that could continue. Spending on this type of company grew three times as fast as general venture capital. Personally I cannot see many downsides to this, without fintechs several aspects of our daily lives quite simply wouldn’t exist. Julian Skan, who oversaw the research that produced these numbers said, “The massive investment in fintech shows that the digital revolution is well advanced in financial services, and it is both a threat and an opportunity for banks. Fintech is empowering new competitors and start-ups to move into parts of the banking business but, paradoxically, it is also helping banks to create better, more convenient products and services for their clients”. Make sure you check out this article on the massive potential of Australian fintechs.
Daniel McAuley, Co-founder of Wharton FinTech said “the biggest obstacles to success for financial technology companies appear to be neither financial nor technological, but rather psychological. By this I mean that there are lots of ways that FinTech companies can improve financial systems with existing technology and technology in development. However, the space has for decades been dominated by big firms that can often be resistant to change, the big banks being prime examples of this. Overcoming regulation and institutional inertia, and gaining the public’s trust will be key to ensuring widespread adoption of new financial technologies”.
He went on to mention how having reshaped so much of our daily lives, technology-focused startup businesses are poised to disrupt the domain of the ‘sleeping giant’ firms who won’t see them coming.