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September 22, 2015

5 fintech facts to bolster your industry knowledge

Essential things about one of the fastest growing tech sectors in the world.

By Charlotte Henry

Fintech is one of the hottest sectors in tech right now. It broadly describes firms using technology to thoroughly disrupt the world of financial services.

Here are the key things you need to know about this exciting area.

1. Finance + Technology = Fintech

Fintech is a line of business based on using software to provide financial services. It can include everything from services that help you make a payment, transfer money, or even get a loan.

Some famous companies include TransferWise, and the crypto currency Bitcoin.

2. The UK government has a fintech ambassador

Chancellor George Osborne appointed Eileen Burbidge as the UK’s first Treasury special envoy for fintech in July " to champion FinTech across the UK and at an international level".

Burbidge is a venture capitalist by trade, investing in tech start ups as a partner at Passion Capital. She has invested in firms such as Yahoo! and Skype.

Burbidge has just become chair of Tech City UK too.

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3. London – the Silicon Valley of fintech

London really is the centre of the fintech universe. It has leveraged natural advanages to combine a strong, and growing, startup scene, with its proximity to financial services in the Square Mile.

Burbidge, recently said:

"London is the place this disruption is going to be. London and the UK will lead the Fintech sector. It can’t be Silicon Valley, they have produced a few start-ups like Stripe but numbers are tiny compared to the UK."

4. Investment in the sector is booming

In May, Accenture released a report that detailed investment in the sector had tripled worldwide, hitting a total of $12.2 bn, from $4.05bn the year before.

Research by EY commissioned by UK Trade and Investment (UKTI) in August 2014, estimated that the value of fintech in the UK alone was £20bn. That was made up of £10bn in payments, £4.2bn in software, £3.8bn in data and analytics, and £2bn in platforms.

5. Fintech firms aren’t regulated in the same way as banks. Yet.

Regulation for fintech firms is much lighter than it is for banks and other traditional financial institutions. So far this has been a significant advantage to the upstart firms, allowing them to be much more nimble.

This is likely to change though. Governments are, not surprisingly, unhappy about the idea of unregulated finance or untraceable transactions. The recent decision in the US to register BitCoin as a commodity, is likely to only be the tip of the regulatory iceberg.

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