Advances in technology and the ever evolving digital landscape have triggered what can only be described as a revolution in the normally conservative world of the financial services sector.
The tectonic shift in the way we access and use technology in our everyday lives has led to a fundamental shift in the world of banking, financial services and insurance. For instance, Blockchain is only utilised by 0.5% of financial services today but is predicted to rise to 40% by 2025 – this is a software evolution not known to man before. And that revolution has opened up the way for a new breed of technology driven entrepreneurs.
The sector has long been dominated by the major institutions, but now the smaller fleet-of-foot operators have found a way to break down the barriers. These FinTech disruptors are no longer prepared to settle for the status quo and are in the process of grabbing hold of a major share of the financial services market.
The reality is that many who operate within the higher reaches of the financial world are struggling to keep up with the pace of change. And it appears that the disruptors are more in tune with the everyday needs and habits of consumers. They are constantly looking at new ways of capturing the market and they are able to compete with the big players because by their very nature they tend to think innovatively and creatively.
Added to this the UK the banking laws have been changed to reflect the gathering pace of change. Open Banking means that the big lenders now have to share their customers’ financial information.
You may well ask what the main areas of disruption by FinTech will be over the next few years?
According to an industry survey, 80% of financial services executives and senior managers think it will be consumer banking, followed by just over 60% for fund transfer and payments, more than a third for investment/wealth banking and a third for small business banking. Brokerage services (30%) are followed suit by property/casualty/life insurance, commercial banking and insurance intermediaries.
While that may sound a little frightening the shifting landscape is actually great news for the average consumer. It means all of us no longer need to be a maths genius or a trained financial adviser to take control of our financial affairs.
Open Banking and the FinTech sector means we can let specially designed apps take the strain when it comes to taking control of our spending.
These apps are smart enough to tell us when we are paying too much in bank charges, if we can get a better deal on insurance elsewhere and find the best places to invest our savings.
At the heart of this financial and technological revolution is innovation.
Often these pioneers have based their business model around a new piece of technology or a unique software development. The disruptors feel they are able to challenge the traditional businesses because they are wired into the changing landscape and the opportunities it offers.
Whats more, the largest financial institutions are shifting the focus from business as usual to really test what their proposition be to a client. If it takes disruption to bring total innovation to the UK system, then we should encourage, support and recognise the opportunities that are born from these pioneers
Through our experience we have discovered that willingness to embrace change along with the ambition to always try offer better services and products than everyone else is key to being successful in business.
And that is why the FinTech sector is currently one of the most exciting and fastest growing sectors of the economy.