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December 28, 2017updated 19 Jul 2022 9:54am

Fintech in 2017: Brexit, Blockchain and Bitcoin

What has stood out the most for you in the fintech industry in 2017?

By Tom Ball

2017 has been a year of cutting edge technology development, with feverishly formulated plans in AI and blockchain for mass disruption emerging constantly. The old adage that necessity is the mother of invention seems to ring true this year, with leaders in the financial sector and in technology looking to enhance processes and find solutions by harnessing these technologies.

London has been the incubation pool for some of the most outstanding fintech startups, with the capital forming the engine that has driven outstanding progress in the UK industry. Growth of the UK fintech industry has been so prolific that fears of Brexit impacting its success have been all but annulled.

Fintech in 2017: Brexit, Blockchain and Bitcoin

The year that we are now at the end of cannot be recounted without mentioning the might bitcoin, and the blockchain technology that drives it. Bitcoin has leapt to the attention of the mainstream media, now worth close to $20,000 per unit after beginning the year just above $1,000. Blockchain has also caught the imagination of major organisations like IBM, a firm that has entered into numerous high profile partnerships centred upon the application of the technology.

Importantly, fintech has also moved closer towards having a positive impact on the lives of ordinary people, not just in streamlining the cross-border transactions carried out my major organisations. For example, Insurtech is beginning to reach ordinary people, with applications and services provided that allow for a smart approach to car insurance, an important and often complex facet of everyday life.

Join us as we take a closer look at the journey fintech has been on during 2017, reflecting on some landmark observations that might help to foresee what 2018 will offer in the world of fintech.

Triumph in spite of Brexit fear

Confidence in UK fintech was badly damaged for many by the Brexit vote, with the belief that the decision would drive away international investment and interest in favour of a different European financial hub.

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This fear has not come to fruition; the UK fintech industry has experienced a year of unprecedented success since the vote was cast, and now it stands proudly among global leaders including the United States and China.

Between the first and third quarters of 2017, UK fintech attracted 100 per cent more venture capital investment than it did during the same period in 2016. This progress was tracked and presented by London & Partners, also noting that UK fintech companies have raised $1.3 billion since the EU referendum itself, a figure than indicates acceleration in funding.

Fintech in 2017: Brexit, Blockchain and Bitcoin

London’s Deputy Mayor for Business, Rajesh Agrawal, said: “More than £1 billion in venture capital has been invested into London’s fintech sector since the EU referendum – this is yet more proof that global investors believe London will remain a leading fintech hub for many years to come.”

The report from London & Partners valued the UK’s fintech industry at a colossal $1.05 billion, third in the world behind China at $1.4bn and the United States at a towering $4.8 billion. This continued progress will give the UK industry strong trajectory on the way into 2018, putting it in a robust position to take on any other challenges that may emerge during the separation process.

Fintech firms have been found confident that they will go from strength to strength. Research from EY found that half of them are expecting growth increases to exceed 100 per cent, if this proves to be the case, the UK fintech industry could be worth as much as £2.5 billion, placing it in a strong second position in the global runnings.

The year of the Bitcoin

It is without a doubt that 2017 will be etched into the history of Bitcoin for all time, remembered as the year that the journey really began. The unparalleled success of Bitcoin has also raised awareness to other forms of cryptocurrency like the Ethereum currency, Dash and Litecoin.

Cryptocurrency may be set to become an integral pillar in the future of fintech, but it is this year that is has gained massive mainstream attention. At the beginning of the year Bitcoin was still somewhat of a play thing, valued at around $1,200, many were surprised it had reared its head above the $1,000 mark following a collapse in 2013.

Fintech in 2017: Brexit, Blockchain and Bitcoin

Quickly the ball began rolling and momentum started to build, many ears pricked up when the currency surpassed the value of gold by the ratio of an ounce to a unit for the first time at a value of $1,268 per unit.

As the year wore on, minor dips in the value of the currency were not enough to be a major hindrance to the explosive growth. A hard fork that created the Bitcoin Cash currency also failed to damage confidence in the original, and the threat of Segwit2x, and initiative that would have created another new cryptocurrency was diverted by influential figures in the cryptocurrency world.

Little did the world know that the real explosion would not take place until November, at which point the currency charged toward the $8,000 mark. Since this point the value of the currency has more than doubled, with it now knocking at the door of $20,000. While many are excited by this colossal growth, it may force regulators to clamp down on the cryptocurrency.

Blockchain bonanza

While it has not garnered the mainstream hype of bitcoin, blockchain technology is what powers cryptocurrencies, and it has attracted the attention of the largest and most influential organisations in technology and finance. The likes of IBM and JPMorgan are examples of pioneering companies from these spaces.

Although blockchain is still a nascent technology in truth, 2017 has been a year of major planning and development, with organisations banding together in consortiums and partnerships to drive progress and discover ways in which the technology could have a disruptive impact.

IBM has been a noticeable pathfinder in navigating the blockchain frontier, engaging in partnerships with other industry behemoths to trial the technology. One such instance is the partnership between IBM and the global shipping leader, Maersk.

Fintech in 2017: Brexit, Blockchain and Bitcoin

To the present day the shipping industry is extremely complex, paper-based and riddled with inefficiency. In light of this, Maersk has been working with IBM to find ways for blockchain to strip away the risk fraught processes of the past while streamlining and enhancing the industry.

Cross-border payment is an area that has been surrounded by financial institutions looking to reduce the amount of time needed to carry out transactions. The traditional process is arduous and outdated due to the fact that foreign currency must remain stuck in dislocated destinations so as to carry out a payment. The application of blockchain would in theory allow for a seamless, real-time means of executing the process.

This project has been spearheaded by JPMorgan in 2017, who in collaboration with the Royal Bank of Canada, announced a new payment processing network based on blockchain technology. Emma Loftus, head of global payments and foreign exchange at J.P. Morgan Treasury Services, said: “Blockchain capabilities have allowed us to rethink how critical information can be sourced and exchanged between global banks.”

Insurtech and Regtech

These two off-shoots of fintech are further prime examples of the disruptive potential that cutting edge technologies have to be disruptive within finance. Insurance and regulation are both areas of deep complexity that are in need of streamlining and modernisation for greater transparency.

Progress has been made in insurtech by companies like Cuvva, the provider of a mobile app via which the user enters their registration number, approximate vehicle value and a picture. With this information the technology is capable of providing an instant quote, a process that traditional could take time and effort.

Brolly is strong example of a UK insurtech startup that has been making progress in the space. Tapping into a top tech trend of 2017, Brolly harnesses the power of AI to purchase and then manage insurance products, making it easier to have control over your insurance options and to switch without difficulty.

Fintech in 2017: Brexit, Blockchain and Bitcoin

Neos is a perfect example when outlining the progress of insurtech in 2017, this is because the firm has IoT at its core. IoT is perhaps set to be the most widespread technology that will characterise this off-shoot of fintech as it can be imbedded in vehicles and homes for example. Neos focusses on home insurance, providing IoT devices to provide high tech monitoring of events like fire and break ins.

As outlined, Regtech is the application of technology to regulation, intended to be used by companies to assist in the often complex process of achieving compliance. Regtech has grown in popularity and importance in 2017 because of PSD2, MiFID II and GDPR looming in early 2018. The financial crisis of 2008 has also placed a focus on regtech, with its catastrophic impact forcing regulatory bodies to take a more robust approach.

DueDil is an outstanding example of a provider of regtech, collating massive amounts of data to enhance visibility and transparency for organisations aiming to achieve compliance. The company has raised over $30 million, giving perspective to the popularity of its offering.

Fintech has saved Britain money

The beneficial capabilities provided by fintech companies have not been lost on British business, with 65 per cent of them found to be using at least one service, while 77 per cent have been found showing awareness of the opportunities it promises.

Another impressive statistic, 19 per cent of British businesses are working with at least four fintech solutions, embracing the industry and the future. These findings were made and collated by MarketInvoice in 2017, also noting that £4.6 billion has been saved by businesses in the UK by adopting these new approaches to traditional processes.

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Foreign exchange was found to be the most common area that fintech solutions were applied to, a complex process that involves conversion of differing rates and types of currency. Cloud technology has also been applied to accountancy in 24 per cent of cases.

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