The FinTech industry is relatively new and yet while it has taken the world of business by storm, there are still many that are yet to get to grips with it.
This new, unique initiative is expected to change the way in which businesses handle their finances forever, so for those who require an understanding of FinTech, we have created a short guide to what it is exactly and why it is so important.
What is Fintech?
FinTech is a shorter term to describe financial technology, a modern industry consisting of apps and software to support businesses with their finances. These businesses – which are usually startups, given the recency of the industry itself – aim to provide a simpler way to handle finances, than the traditional high street banking and investment methods currently available.
Investment in FinTech has seen impeccable growth in the past few years, with a recent Accenture study finding a 67% increase in the industry’s year on year investment, to $5.3 billion. Not only that, but much of the industry’s investment stems from Asia and Europe, with the Mayor of London stating that 40% of London’s employees are working in the finance and technology sectors.
Why does it matter?
With FinTech quickly gaining ground, the more traditional methods of handling finances now have competition to battle with, in order to keep its consumers and continue running as an industry. When once, a small business or startup would turn to banks or meet with investors to discuss their business and finances, FinTech now offers a simpler and much more convenient way of handling finances and seeking investment.
The introduction and easy accessibility of online and mobile payment transfers, as well as crowdsourcing for investment, have made it much easier for entrepreneurs to start up their businesses and develop it. Through the ability to seek investment from anyone around the world, investment opportunities are quicker, simpler and easier to acquire. And with mobile payments providing transfers around the world with just the touch of a button (rather than having to wait for money to cross borders), being able to provide funding is much simpler, too.
Not only that, but with FinTech companies having more room to adapt and innovate compared to the big banks with numerous compliance processes, these services require a lot less money to run and so can save their clients a lot of money.
The expectations of consumers has been affected by the FinTech industry, as well. With its rise, the line separating large and small businesses has been diminished, and consumers are expecting the same from smaller companies as they do from bigger ones. While this can be seen as unfair, the technology actually provides smaller businesses with the ability to compete with businesses they never dreamed of battling against, offering much more opportunity for growth.
FinTech Hall of Fame: UK FinTech companies
Here are just a few UK FinTech companies that are excelling in the industry, according to the FinTech Hall of Fame.
Currency Cloud – Allows business customers to transfer money around the globe in a quick, secure and transparent way.
Funding Circle – Provides investment services that work perfectly for small businesses to grow.
Nutmeg – A low-cost investment management service.
Transferwise – Another FinTech startup service that offers businesses a low-cost way of transferring money around the world.
Adyen – A “multichannel payment” service that allows businesses or individuals to accept a payment at any location in the world.
The FinTech industry has been born and developed extremely quickly, and it shows no sign of stopping anytime soon. Businesses can expect to benefit greatly from the services, however if you would like any advice concerning your business and its finances, do not hesitate to get in touch with us.