The FinTech sector's on a serious surge right now, with the number of UK firms already estimated at over 1,600 and set to double inside the decade. So, what's the big deal? How and why is FinTech shaking up the financial industry so hard? As we see so often these days, it's all a matter of innovation and disruption.
Thinking Outside the Box
For one thing, thinking outside of the box is a lot easier and more effective when you're not still dragging that box around with you. Traditional financial organisations aren't known for their agility or responsiveness. The new breed of FinTech start-up doesn't have the weight of legacy technologies, systems and thinking slowing it down. FinTech specialists move fast and travel light – and they don't flinch at the thought of outsourcing entire departments if it gets the job done better and frees them up to focus on their core work.
This flexibility, combined with the fairly light regulatory framework they're dealing with, means FinTech firms can keep themselves impressively trim in terms of assets. In a sector where stability is such a key issue, this might sound like a risky approach - but innovation and risk are old friends and innovators are learning to tackle the hazards and maximise the rewards through initiatives like the UK government's R&D Tax Credits scheme.
The other big factor strapping a rocket to the FinTech sector is that it's ditched the navel-gazing and learned to look its users in the eye. Focusing on the making customer's life easier is a strong move in any industry – but in the financial sector it's practically revolutionary.
FinTech apps are centred on the customer's needs, where more traditional websites and applications tend to build walls of text between the user and the functions they're trying to access. Putting the user experience at the forefront makes the new breed of Fintech apps instantly more appealing, not to mention more useful in practical terms.
The Changing Landscape
Not that any of this poses a major threat to the banking industry dinosaurs, as such. In fact, many of FinTech's biggest backers date back to the financial sector's Mesozoic Era. Online payments, alternative finance and digital wallets are finding their way into the vocabulary of some of the biggest names in banking.
What's changing, though, is the landscape around the whole sector. Start-ups are blossoming with creative, often custom-built offerings and a keen eye on the end user. FinTech apps are designed to be simple, accessible and intuitive. What's more, they're engineered to unlock some of the biggest new ideas in finance, from crowdfunding and P2P lending to on-the-spot financial monitoring for individuals and businesses alike.
Every decade or so, the financial sector feels the tremors of the “next big thing”, whether it's credit cards, automated tellers, online payments or cryptocurrencies. FinTech is the latest milestone in this long tradition, and like every milestone its significance lies as much in hinting at where we're headed as in telling us where we are. The “future of finance” is permanently on the horizon, and innovation is always the surest route there.
Everyone's excited about FinTech – but why is it such a disruptive force, and what does it say about the impact of innovation in finance?
Get credit for your business innovation with research and development tax credits claim assistance from RIFT. Find out more about R&D tax credits for software development, deep dive into the world of business innovation with our insights, or contact RIFT R&D today to find out how we can maximise your benefits.