Fintech- What is it really?

‘Fintech’ is a phrase you may have heard increasingly used in the media and within technology circles but despite being banded about it is a term even innovation academics, entrepreneurs and the tech savvy can’t get to grips with.

We’ve mentioned fintech in previous posts, as an example of a digital innovation and an industry to watch over the coming years, but what exactly is it?

What is Fintech?

The most straightforward and rigorous definition found with an online search is that ‘Fintech’ or ‘financial technology’ is a new financial industry that applies technology to improve financial activities.

FinTech companies are businesses that use technological clout to create new and better financial services for both consumers and businesses.

This emerging industry has been used to automate insurance, trading, banking services and risk management and the products and services include many categories, such as, lending; personal finance; investment; consumer banking and financing.

Why Fintech Matters to the Business World?

In recent years the rise of fintech firms has been viewed as a threat to traditional financial services, like the high street bank and conventional investor.  Fintech company models are far more agile, being small start-ups with fewer overheads and less commitments. They can therefore make sourcing funds and transferring money across borders, for instance, quicker easier and cheaper.  The current perspective is that the traditional financial institutions will have to adapt to survive by embracing such technological solutions or partnering with fintech companies.

Fintech has been a great leveller and has opened up a whole world of opportunities.  Businesses can offer services at a fraction of the price and with the rise of smartphones, fintech satisfies an individual preference for use of online apps to manage our financial lives.

2018 was a stellar year for fintech, the US remained the top of the market with investments worth $11.89 billion and the UK led the way in Europe, raising $1.7 billion.  The high paced momentum has many people asking will the fintech bubble burst? Academics feel that even in the event of a bubble burst and a future plummet in investment, ‘FinTech’ may disappear as a label but the solutions it has brought forward will kept alive and absorbed by other players.

Why Fintech Matters for Recruitment?

Not only does the sector employ 76,500 people, projected to grow to more than 100,000 by 2030, UK fintech firms are also predicted to create over 30,000 new jobs in the coming decade.  This is a sector every recruitment agency should have on their radar.

Right now, London is one the best places to build and grow a fintech start-up too.  UK fintech is thriving, but it is vulnerable. Fintech’s success depends on acquisition of talent and two big concerns are the lack of homegrown technical skill and immigration policy changes post-Brexit.  The UK does not want to put its global standing as a leader in fintech at risk and it looks like talent management will be key to the UK remaining attractive and capable of future growth in financial services.

What To Look Out For?

Entrepreneurs and recruiters need to view keeping up to date with fintech developments as a vital part of their daily life. Being aware of the latest opportunities and developments within the field will only improve your business and help you stay at the forefront of your market.

In order to help you do this we have included a link to the most innovative companies and leading disrupters for financial technology in Europe, known as the FinTech 50. We also recommend looking into the up-and-coming World Fintech Forum, in London, on May 21st and 22nd.

 

 

 

Georgia Burbridge

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