The Fintech Revolution: How The Innovators Are Making Us Rethink Financial Services

11 September 2017

1585 Original

#emergingopportunities  As growth of financial technology disrupts traditional banking 

There’s a buzz around fintech. Described by some as the tech industry’s next big frontier, fintech (short for financial technology) refers to the use of technology in providing financial services, whether that’s led by an incumbent player or a disruptive start-up.

Until recently, the banking sector has held a tight grip on virtually all aspects of financial services, bolstered by a complex regulatory environment, the importance of reputation and trust, and consumer inertia (amongst other things). However due to technological innovation, a distrust in banks following the financial crisis and the emergence of a new breed of user (particularly millennials and small businesses) who are more open to using new technologies in their financial lives, we are now seeing new players disrupting the sector to gain market share away from traditional incumbents. However it’s not just the disruptors who are winning; many fintech start-ups are focused on helping traditional players retain their relevance in a digital world.

But what exactly is fintech revolutionising? The answer is wide-ranging; fintech innovators can be found across a diverse range of customers and services. Here are some of the ways that challenger tech companies are reinventing financial services. 

Payments

The largest fintech sub-sector is worth £10bn in the UK alone. Some firms enable faster, cheaper international payments (eg TransferWise or WorldRemit), some help retail enterprises better track their cashflow (like AgentCash, who have processed over 50 million payments) and others are providing smarter payment solutions for small business, like iZettle, which allows users to accept payment via a smartphone or tablet. Bigger players like Apple, PayPal and Amazon are also leading in areas including mobile and online payments.

Retail banking

Consumers expectations are changing: people now demand the same usability, instantaneous feedback and great service that they experience in other aspects of their online life. Monzo, the app-only bank which holds happy hours for its customers, is an example of one company that has seen huge success, valued at £50 million last year. Tom Blomfield, CEO of Monzo, told Wired that “The big banks are stuck". They’re trying to do the user experience, they’re trying to do the brand, but they’re not very good at either of them, because their systems are holding them back”. Other players include Trussle, the online mortgage service where you can get a mortgage in 2 days with no fees, or Nutmeg, the personal investment management platform that allows you to set up your portfolio in under 10 minutes

Lending and financing

Just as the internet has enabled sharing economy like Airbnb or Uber, peer to peer lending and financing is taking off, connecting those who wish to invest their money with those that need simple financing solutions. Prosper, the US peer to peer personal loan company has financed $10 billion, and Funding Circle, the London headquartered firm who provides small business loans, has invested £3 billion in 23,000 companies across the world.

Insurance

Venture capital backed funding for ‘insurtechs’ grew 225% between 2014 and 2015, making it one of the fastest growing fintech sub-sectors. Some insurtech’s, like the US firm Lemonade, have gained licenses to underwrite and issue policies, threatening traditional insurance companies by providing a faster, cheaper and more ethical service (Lemonade, for example, donates some of its profits to charity). However, many fintech firms are more focusedon enabling traditional players to streamline their operations and utilise new distribution channels, with services including robo-underwriting (using algorithms to automate the assessment process) and chat-bots for customer service.

What does that mean for me?

Here in the UK the future looks bright for fintech. London is regarded as a world hotspot; the city boasts a strong financial services sector, the best software expertise across Europe and relatively relaxed regulations – as well as tech-savvy consumers that are open to change.

Fintech companies are growing, both in the UK and globally, and it’s critical they attract the right talent to drive that growth. Many firms are looking for tech experts: machine learning, Java development and data science for example. Often a background in financial services isn’t essential so long as you’re technically strong in your discipline and can prove you’re adaptable and creative to different sectors.

There’s also opportunity for those with experience in financial institutions who are looking for a new challenge in this dynamic and innovative sector. If you’ve got technical experience as well, then even better. But there’s plenty of opportunities for marketers, strategists and relationship managers too.

Whatever your skill-set, if you think you’ve got relevant experience and are excited by the prospect of working in one of the UK’s hottest tech markets, then register for opportunities, view our jobs, or reach out to one of our consultants.