Fintech is causing disruption everywhere and is moving past its infancy in terms of acceptance and growth within the financial services sector. During the StrategyEye ‘The future of fintech is now’ event in partnership with Barclays Accelerator earlier this week, the growth and impact of fintech was discussed by some of the fastest-growing companies in the fintech space, alongside pitches from Barclays Accelerator start-ups who are attempting to disrupt the insufficient parts of the finance industry.
The event which was sponsored by bobsguide, was opened by Tom O’Meara, Head of Editorial and Analysis, StrategyEye who said that, “Venture capital investment is higher than ever, infrastructure and hardware is becoming more prevalent and the technology is finally gaining traction both among companies and consumers. There are a number of factors making it a conducive climate for fintech, but a chief driver is a genuine desire for innovation."
According to StrategyEye deal data, investment in fintech has increased from $520m in 2010 to $2.8bn so far this year, as adoption begins to accelerate. Figures show that $1.8bn of investment has come from the US, however, EU investment is also rising and has seen a 34% increase compared to 2013 figures.
David de Koning, Head of Communications at peer-to-peer lending marketplace, Funding Circle gave a keynote presentation during the event and said that he believes London will dominate the fintech space in the next few years. De Koning also said that banks dominate SME lending at the moment but times are changing. According to de Koning Funding Circle is helping to fill the void by helping SME businesses to get a loan and although there is a massive appetite for small UK businesses to access finance, 33% of these businesses would not have gained access to funds without the help of Funding Circle. "We've now processed more than £390m ($614m) in loans on our platform. What we're seeing is that there is a massive appetite for small businesses in the UK desperately looking to access finance. While banks exist and are still a major part of the process, the tide is very much turning now. In the next few years we will see London start to dominate the fintech space. We’re going to start seeing the billion and multi-billion dollar companies that the press has talked about for years.”
Azimo, the online money transfer company is also filling a void within cross-border consumer payments. According to Marta Krupinska, Head of Operations and Co-Founder of Azimo, after her own personal experience with the high fees charged for sending money to loved ones abroad, Azimo was set-up to help migrants send money to their countries for a fraction of the price. Krupinska also said that with around $500bn in remittances worldwide (a figure which is set to rise to $700 in 2015) Azimo want to disrupt the money transfer industry. “The mission: to disrupt a half a trillion dollar industry by focusing on the customer need and using technology to break down the price. By doing that we believe we can build a billion dollar business.”
After keynotes from the fintech companies’ perspective, the event also included a keynote session from Barclays Accelerator, Ecosystem Manager, Simon Taylor who talked about the roles banks can play in helping drive innovation and foster entrepreneurship. Taylor said that banks were set up to help the economy and that by supporting innovation this can help to support the economy. “If you think about why banks were set up in the first place, they were set up for a reason – to help the economy. That return to supporting economies and supporting entrepreneurship, supporting innovation is something we’re very keen to do."
Pitches on the night were made by Squirrel (a total savings, budgeting and bill management tool) who said that "The pay day loans market is worth £4bn in the UK, the overdraft market is double that. A £100 unauthorised overdraft from Natwest or Halifax can cost you £35 per week. It’s no wonder people get into debt spirals.” MarketIQ (patented predictive analytics platform) who take in data from sources such as Twitter, Facebook and blogs, and turn it into insights, focusing on changes in sentiment. Aire (alternate credit scoring model) who want to help 'thin-file' customers obtain credit and ClauseMatch (a contracts negotiation platform) that aims to solve the Jurassic system of contract negotiation with their cloud-based dashboard.
Although there may be challenges ahead for some fintech businesses targeting the mainstream, it’s clear that 2014 has been an exciting year for the global fintech industry and for the UK and London in particular, a trend which is set to continue in 2015.
By Nicole Miskelly, bobsguide Lead Journalist