Definition: The Fintech Industry is a combination of financial technology as a developing financial services sector. Initially, the term was used to describe the technology function to the back-end of consumer and trade finance institutions. Now Fintech has expanded to comprise any high-tech modernization in the financial sector, together with advances in the financial sector, retail and commercial banking, wealth management as well as bitcoin.
Explosive Growth Of The Fintech Industry
Global investment in fintech has skyrocketed from $930 million back in 2008 to over $12 billion by the beginning of 2015. Europe experienced the highest growth rate, with an increase of 215% to $1.48 billion in 2014 and $24.7 billion in 2016.
The traditional model of a business seeking a commercial loan from its local bank is no longer the only game in town. The development of the Fintech Industry further evolved how companies do business.
The rise of the smartphone in the Fintech Industry has massively changed the behaviour of consumers. Thanks to the ‘always online’ culture we live in today along with the massive number of apps that feed the smartphone – people can do things online online that they never could before, an more, they can do all this while riding the train.
People can now do their online banking, manage their investment portfolio, chat with clients as easily at they could manage their Instagram pictures or send a SMS. It’s a huge opportunity for businesses in the Fintech Industry and the day is coming that no company will succeed without the right fintech services in place.
The rise of the Fintech Industry has opened up a world of possibilities.
Businesses can offer more services than ever and for a fraction of the price of what it would have cost before.
Entrepreneurs need to view keeping up to date with Fintech Industry developments as a vital part of their daily life. Being aware of the latest opportunities and developments within the field will only improve your business and help you stay at the forefront of your market.
Looking forward, expect Fintech disruptors to continue to expand into other areas within financial services. There’s a lot of interest in areas like marketplace lending, credit underwriting, digital cash, treasury functions, deposits, and bill payments.
Perhaps more importantly, there will be much Fintech Innovation in the coming months in the business-to-business (B2B) space.
Expect tech innovations to happen on a regular basis. As they do, they’ll start to radically alter business processes and drive down costs. Today we are already seeing firms exploring how they can use these groundbreaking technologies.
Everyone needs to recognize that this isn’t going away. It’s the “new normal.” Over the long-term, financial institutions are going to have to make some fundamental changes. They’ll need to:
- Become more agile.
- Manage the business from the “inside out” instead of from the “outside in.”
- Change the way they approach innovation.
Companies to Watch in the Fintech Industry
Adyen is a Dutch based international payments processing firm that was founded in 2006 and offers payment services on desktop, mobile and in-store.
The start-up claims to be a “social trading network” for investment which avails users to mimic trading approaches of other successful traders.
Funding Circle matches investors to small and medium-sized businesses as one of many peer-to-peer lenders.
iZettle processes payments with a solution to companies with a free card reader that will connect to tablets or mobile telephones.
IMMFinancial.com, a Canadian/USA based company founded in 2006. The company is also a type of peer-to-peer lender with the added bonus of being able to combine different financial products to meet the needs of the borrower.
Klarna is a challenger to PayPal. Their users do not need to register and may places by simply entering their email address and postal code. Users have a 14 day grace period to pay for the goods once they arrive.
Nutmeg, a British start-up is a FCA regulated online wealth manager.
A London-based peer-to-peer money transfer firm allows users to transfer money across different borders and currencies at lower costs than traditional banks.
Zopa is a British peer-to-peer lender founded in 2004 and a rival to Funding Circle.