3 Fintech Trends Driving Innovation in Finance
An unprecedented $346 million was invested into FinTech in Europe during the first first six months of 2014. The amount more than doubled from the same period of 2013.
FinTech – short for Financial Technology – is indeed a hot topic these days. With revolutions like Bitcoin, online funding, and less expensive money transfers, the industry of finance is being shaken up by programmers and entrepreneurs that now have the knowledge and the resources to disrupt an industry that has long-benefited from a dominant position.
There are a few key trends that seem to be driving this innovation and fostering the growth of startups in the sector.
Disintermediation of banking services
The pervasiveness of smartphones and personal computers has empowered the average person to pursue their own information search – via Google, for example – rather than soliciting services from intermediaries.
Social networks have compounded this trend, with the ability to search, share, and validate alternative resources with friends and the global community. Taken together, this has created a fertile environment for new forms of online financial solutions to take root, ultimately resulting in the disintermediation of banking services.
Credit is being disrupted by peer-to-peer(P2P) landing. Equity investment search has moved online. With AngelList acting as main business angel network and other providers also offering the clearing of investment payments (equity crowdfunding). Payments are also changing course, moving from standard bank accounts to new currencies, virtual currencies (Bitcoin) but also corporate credit, e.g. your amazon coins.
Easier access to technology
The expansion of APIs (application programming interfaces), clearer online information, and openness of financial standards (XBLR) allow companies to develop solutions for a vast array of previously-proprietary markets. Innovations from startups are continually encroaching on the high commissions for international transfers.
- Something as simple as a mobile app allowing users to send payments directly from by phone can have significant consequences for market incumbents.
Easier access to technology also allows the development of a vast array of financial software for companies. Based on accounting data, Bodetree and others are changing the accounting industry by outsourcing the tedious-but-necessary financial management tasks.
Big data and new data
Plenty has been written about big data. However, as better ways to store, analyse, and search vast amounts of data are emerging, FinTech companies are looking for ways to utilize these means for financial purposes. One example is the pooling of social network data with fund management and investment in relation to company analysis and management.
Usage of big and new data can and will improve investment decisions. Many articles have already been written on how entrepreneurs’ social proof can improve his credit score. Now this process can be made more comprehensive using mass-compiled data from social networks and other sources.
- As one of the biggest in the world, the financial industry is of course target of deep innovation and disruption. These trends are empowering small and medium companies to do exactly that. It is going to be an interesting market to watch in the coming years.
Source –Daniel Faloppa, Founder of Equidam