FinTech (or Financial Technology) has exploded into the public consciousness over the last 5 years. The likes of Bitcoin and other cryptocurrencies have stimulated the belief that financial industries are ripe for disruption. This gives way to potential opportunities for those who know how it all works.
According to the Financial Times, the FinTech industry was completely unaffected by the Brexit vote and continued its upward trajectory of attracting an ever-increasing amount of venture capital.
New Fintech businesses such as TransferWise and OakNorth raised $1.8bn of venture capital last year, a 150% increase on the previous year, showing that the sector is due to make a significant impact on investments and the job market over the coming years.
Investment is helping FinTech to grow and thrive, and it’s returning the favour throughout the world. Let’s look at some of the benefits that FinTech is offering business across every other industry.
In the big cities across the UK, but most specifically London, cash is becoming a rare sight.
Londoners aren’t even allowed to use cash payment for bus rides anymore as contactless payment makes managing money significantly easier.
The same can be said for small businesses, more specifically, food and drink vendors without permanent residency. However, these businesses were forced into only accepting cash as card machines required being plugged directly into a phone line.
This is no longer the case.
The likes of iZettle recognised that small businesses wanted to offer card payment to their customers but were inhibited by a lack of technology, so they came up with a small but simple device that could take card payments without having to be plugged into the internet or any phone line.
The business raised $63m in 2017 to enhance its mobile offering to small businesses, demonstrating how genuine trickle-down economics can work.
Cryptocurrency has a complicated relationship with the business world and the major banks. This may be due to its nature as being decentralised and therefore much more unstable than regulated currencies.
However, the appeal of being able to transfer money intentionally without huge drawbacks has been noted by other FinTech businesses. They have, in turn, made it easier for small businesses to expand into new markets through peer to peer services.
Morgan Stanley research estimated that P2P lending could reach $480 billion by 2020 alone, highlighting how lending money using new tech is helping businesses expand.
Accessing new Markets
The likes of Stripe and Paypal have also played a major role in allowing businesses to offer their services or goods to a global audience as payments can now be taken from Australia or Thailand just as easily as they are in the UK.
This means that an individual could actually create an entire business for a market outside of the UK. They could then operate it within Britain, where the competition is incredibly tough for small businesses.
Investment drives innovation
As highlighted by the iZettle example, FinTech businesses are generating investment to help them achieve specific tech advances which are geared to help their users even more.
This means that the end-user will continue to benefit as millions of pounds are poured into FinTech businesses.
Although technological improvements have driven the financial industry forward for decades, the new age of FinTech is clearly something different.