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Fintechs, or financial technology companies, were the great buzz of 2015. Their creative approach to finding new ways to perform traditional finance-related tasks set investors, consumers and industry analysts calculating, using and predicting what might be the next move. With smartphone payments, bank-free current accounts, and 24/7 platforms that can find maximum-yield investments in seconds, fintechs are the embodiment of progress.
There’s no question that the fintech industry is booming. Investment in FinTech really took off a couple of years ago, with 2015 investment easily doubling that of 2014. Business Insider (1) identified 25 fintech companies as “unicorns” (companies aiming to reach the billion-dollar mark as quickly as possible), including the payment service providers Stripe and Klarna. But high rates of investment aren’t a guarantee of survival, and they’re certainly not the only factor for fintech success.
It’s the increasingly rapid advances in everyday technology that have created conditions ideal for the disruptive power of fintechs. People are now accustomed to having technology work for them, and the smartphone is a key player here. If you can transfer funds in seconds rather than days, manage your money and investments from anywhere you’ve got a connection – well, why wouldn’t you? fintechs are turning established models of financial business upside down by offering always available, intuitive services that offer instant results.
Speed also plays a crucial role in the fintech industry’s innovation cycle. The ability of fintechs to build good apps and implement prototypes within a short period of time is in sharp contrast to traditional financial institutions such as banks. Customers get speedy access to new functions, and feedback can be taken into account and acted on in the very next release – a responsiveness which highlights fintech’s IT industry roots.
Although the services they offer may occasionally be startling, Fintechs aren’t anything new for IT industry insiders. Now, however, more tradition-oriented organizations are deciding they want a slice of the pie, and are showing increased interest in learning from, and partnering with, new providers. The Money 2020 conference, traditionally a US-based event, will hold its inaugural European event (2) in April 2016, a clear response to ever-growing interest in the sector.
It’s not yet clear – will it ever be? – what the future may hold. Fintechs have succeeded in implementing technologies which could barely be imagined 20 years ago. Their influence on the evolution of traditional financial institutions and consumer habits has yet to be quantified, but one thing seems certain: fintechs are here, in one form or another, to stay.
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