The words ‘finance’ and ‘challenger’ rarely go together- unless we’re talking The Bank of Dave; that guy from Burnley who took it upon himself to offer loans to businesses and individuals in a bid to show major lenders were out of touch with the modern world.
In reality, though, this assumption is no longer the case. With investment increasing tenfold between 2008 and 2015- to a staggering $12.5billion- Fintech is clearly very big business indeed, and yet it remains very much on the periphery of the finance world. Simply defined as technology startups aimed at revolutionising the world of money, whilst the subject sounds dryer than the Sahara business leaders need to understand its importance now, or risk being left behind by tomorrow morning.
Here’s everything you need to know about this sector, but were too afraid to ask the banks, which are already struggling to keep up.
What is Fintech?
The term Fintech means Finance Technology, and applies to any area of the technology startup scene focussed on increasing access to, usability of, and control over money- so that could be mobile banking, transfers, asset management, loans, or fundraising, to name but a few.
Who are the big players and what do they offer?
Still confused about what all this means? Here are a few ones to watch which should shed some light…
This San Francisco-based startup quietly raised $200million in four years, offering pay-per-mile vehicle insurance, which is set to become mainstream very soon. A partnership with Uber means there are two offerings, one for low mileage, one for higher users and commercial drivers.
In the US this is apparently the fastest growing app out there, and for good reason. Tilt allows you to raise money for anything, basing itself on peer-to-peer payments and crowdfunding. It might be chipping in with mates for a takeaway and movie night, raising money for a sponsored walk, or sourcing major investment for a new commercial enterprise. It really doesn’t matter- hence the success of the world’s first ‘social network built around money’.
Born in the current era of devastatingly-low high street bank savings rates, Zopa is a leader in peer-to-peer lending; putting borrowers who want a good loan rate in touch with investors looking for a better return on their money, helped along no end by the rise in price comparison websites that include firms like this in their results, showing just how much more favourable they are up against the big banks.
Tech City News’ Fintech startup of the year 2017, Divido’s proposition is simple; give customers the ability to pay for anything in monthly installments. Based in London, the capital of this entire sector, the firm works with multiple lenders and retailers, covers various countries, and offers a higher approval rate and lower costs to purchasers than incumbents, hence its exponential rise to superstardom.
Why is this important to you?
Regardless of whether you’re actually looking for alternative ways to attract investment, finance new equipment, or reap greater rewards from your own pot of gold, Fintech is massively significant simply because it provides a blueprint that’s relevant to more than this sector.
Ultimately the success of this industry boils down to one fundamental truth- the firms have approached changing customer demands head-on, meaning they provide solutions that actually make sense in terms of how people live their lives in 2017. It sounds pretty basic, because it is, and yet so many firms fail to understand this is what they should be doing to truly achieve their potential.
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