In recent years’ financial technology has proven to be a very exciting and innovative industry to watch and even become a part of. Between 2008 and 2013, global investments in financial technology ventures tripled; continuing the growth trend in 2013 the number of investments worldwide went from $3billion to a whopping $12billion in 2014. However, to really put this into perspective, from 2010-2015, the global investment into FinTech translates as $49.7 billion dollars; 25% of which was invested in Q1 and Q2 of 2015, which just goes to emphasize the surge in investments in the past couple of years.
These are all impressive figures and huge amounts of capital going into a relatively new industry and unsurprisingly this trend is expected to continue well into 2018. Nowadays you don’t have to look far to find a number of FinTech companies successfully owning their share of the market, which includes a large number of high profile FinTech companies globally, as well as new starts ups yet to be discovered. All these FinTech companies are working tirelessly to carve a new approach to financial software through technology to bring people closer to their finances.
The modern consumer
Much of the increased investments into FinTech come from a changing consumer marketplace. The modern consumer is savvier than 10 or 15 years ago, and has embraced technology in a big way. This means customers now want quicker, smarter and more efficient ways of managing their money and the latest developments in financial software are on hand to meet the demand. Providing financial software that is compatible with mobile phones, tablets, laptops and PCS, giving access to financial services anywhere and at anytime.
An industry bursting with new concepts
To meet the demands there are now a diverse range of financial software technologies available that can help with investment strategies, quick payments, money management, digital currencies and much more. It seems that no stone is being left unturned for budding FinTech companies, who are always looking for new ways to improve financial services for everyday people.
One area that has experienced the highest level of investment is payment processing and lending solutions, which accounts for 40% and 25% respectively according to an infographic published by FinTech company Call Levels. This infographic also goes on to identify the key areas where FinTech investment is most successful, which includes Silicon Valley, New York, LA and Boston in the US, as well as Israel and the UK.
However, the highest number of FinTech companies worldwide translates to the US with 4.7 million start-ups, India with 1.91 million and the UK with 0.82 million. Considering the US’s domination in the FinTech industry it isn’t surprising that they have some high level investors such as Goldman Sachs, Citigroup and JP Morgan willing to invest heavily into the US industry, while the EU and Asia are named the second largest backers for FinTech.
The social implications of FinTech
Inevitably, the expansion of the FinTech industry means it is fast becoming the world’s biggest industry, which is set to make it omnipresent in so many different aspects of our lives. From high-tech equity investment software for financial institutions to comprehensive online banking technologies for domestic users, this will inevitably mean that FinTech will have a social impact, evolving how consumers interact with their money.
On the whole this impact should be a positive one, not just for those with high incomes or large amounts of capital to invest or manage, but also for those demographics with lower incomes who would previously have been excluded from a number of banking services. Many FinTech concepts are driving towards creating systems that promote banking inclusion for everyone and anyone, available anywhere in the world.
For example, in developing countries there are high levels of exclusion to financial services, yet almost everyone will own or have access to a mobile phone. Therefore, supplying financial software to banks, lenders and payment providers in these countries will provide banking inclusion to even the most remote locations and low-income consumers.
FinTech is set to expand the services that financial institutions supply to a greater audience and enhance the lives of millions of people in the process, which makes it such a promising industry. Naturally of course, there is also huge potential for investors to grow their capital as these innovators disrupt and alter the financial sector landscape as we know it.