Fintech is the term given to financial service firms whose product or service is built upon technology, often resulting in highly innovative, pioneering services. “Fintech” as a term is a compound of “finance” and “technology”. It is a relatively recent term and is certainly not a buzzword. Fintech is here to stay. Why? Put simply, fintech is changing finance as we know it and is already impacting how increasing numbers of individuals and businesses alike conduct their financial matters. Are banks worried? They certainly are. But their worry does not come from the market share fintechs have currently, as it is miniscule. The real worry comes from what fintechs could do to banks’ market share in the future. The fear is that mid- to long-term, ironically, banks could lose their own sector: banking. Or a significant portion of it at the very least. Fintech growth is seemingly unstoppable. Since 2008 global investment in the burgeoning fintech sector has tripled, from $928 million to $2.97 billion and is forecast to reach up to $8 billion by 2018. The UK and Ireland now account for over 50% of all European fintech investment. Venture capitalists around the world have diverted attention to fintech, mainly as the growth prospects of the sector are stratospheric.
London is the undisputed fintech capital of Europe. With Silicon Valley, London forms one of the globe’s two fintech capitals. Between 2008 and 2013 investment in UK fintech reached $700 million. The investment growth percentage in London far outstrips its American counterpart, although the total amount is considerably less. The UK is now launching an initiative to position London as the main global hub for fintech, for which competition from Silicon Valley, Asia and New York will have present sizeable challenges. However, London’s chances are good. The UK capital is the financial centre of the world, already Europe’s fintech capital, attracts a highly skilled and talented workforce to the capital, and the UK government will look to make London an even more attractive option for fintechs to set up shop there, with Chancellor George Osborne recently pledging support.
Fintech is changing finance in virtually all its numerous offshoots and subsectors. From banking to international money transfers, from business and personal loans to personal investment, and much more, fintech is presenting traditional finance with unprecedented challenges through waves of new, innovative ideas which are having an increasingly sizeable impact on global finance and how as businesses and individuals, we conduct our financial matters.
Find More @ “The Rise of Fintech in Finance – how fintech is reshaping the finance sector and how you handle your money” – By Kantox CEO and fintech thought leader, Philippe Gelis and Finance Insights Manager Timothy Woods.