Bring these two concepts together and you get… FinTech. Simple, right? *Blog done*
Erm. No. Wrong.
FinTech is one of those terms that’s increasingly bandied about, without much explanation or apparent substance behind it. It would be all-too-easy to label it a meaningless buzzword. Check out the rising number of Google searches over the last few years, and how many of them have happened in the last six months:
OK, yeah, so it’s probably a bit of a buzzword. But there’s more to FinTech than that. There’s a philosophy powering the FinTech movement. Technology has succeeded in disrupting a succession of old fashioned industries, and now it’s finance’s turn.
Disrupt or be disrupted
Remember the days when you had to walk into HMV to buy the latest album or single on CD? Think of how far the music industry has come in the last 15 years. First came Napster, then iTunes, then Spotify- today we consume music via the internet. Downloading or streaming tracks is cheaper than buying a CD; it’s more convenient, it’s quicker- consumers have benefitted hugely from the disruptive influence of technology.
Think, too, about the travel industry. Years ago you’d have walked into your high street Thomson’s to book a holiday. The travel agent held all the power, checking prices on your behalf. Now all you need to do is sit at home on your laptop and go to Expedia, Skyscanner or TripAdvisor. Thanks to technology, the power’s back in the consumer’s hands.
The same revolutionary change is happening in financial services. Finance is the most age old industry of them all, broken in so many ways. But technology is stepping in to save the day.
Today we’re going through an exciting period of transformation, where FinTech innovators are figuring out better, faster and cheaper ways of doing things. Like the music and travel industries, the game changers are those that put the power back in the customer’s hands, building products around their wants and needs.
Leading the way
While many of the tech revolutions of the past have originated in Silicon Valley, here in the UK we’re lucky to have many factors on our side when it comes to FinTech. We have a tech savvy population, with widespread access to speedy broadband; facts that have already made Britain a hotbed for e-commerce innovation (look at notonthehighstreet.com, or made.com for example).
When it comes to finance, we’re also lucky to have a relatively supportive government. Vince Cable’s British Business Bank initiative has invested over £100m through alternative finance providers, support which is helping to boost this emerging market’s reputation. The FCA launched regulation of peer-to-peer and crowdfunding in April 2014, but where some in the industry thought this would stifle innovation, their influence has been largely very supportive. Government has also put their weight behind a new trade body for UK FinTech, Innovate Finance.
Last week I went to an event organised by a different government body, Innovate UK (once the Technology Strategy Board), where a new FinTech competition was unveiled. The aim? The uncover and develop some of the most interesting FinTech startups, and partner them with huge industry players. Experian was there, American Express was there, Barclays was there. These giants are desperate to hear what innovations are going on, and what’s possible. They want a piece of the revolution for themselves.
The FinTech revolution has begun. Companies are stepping in and using technology to do things better, faster and cheaper. TransferWise, for foreign exchange; Zopa, for personal loans; Stripe, for online payment; Xero, for accounting; MarketInvoice for invoice finance. And that’s just the beginning- new startups are emerging every day.
It’s not just a buzzword.
Let me know what you think about the term ‘FinTech’- what does it mean to you?