All industries like their acronyms and abbreviations, and the financial services sector is no exception. We’ve got SIPPs, the SSAS, ISAs and, more recently, FinTech.
So what does FinTech mean?
It stands for financial technology, and is an area of the financial services sector based on using software to provide its solutions.
And because FinTech companies rely on software more than traditional financial systems, and because we are living in an age where so much is done online, they are giving the more traditional financial institutions a run for their money (pardon the pun!)
The burgeoning FinTech industry has been growing rapidly. Global investment in financial technology more than tripled to $4 billion in 2013 from $930 million in 2008. In Europe, $1.5 billion was invested in financial technology companies in 2014, with London-based companies receiving $539 million. Indeed, according to the office of the Mayor of London, 40% of the Capital’s workforce is employed in financial and technology services.
Technology and the global credit crunch have made FinTech possible
A few years ago, FinTech services wouldn’t have been possible, but the rise of technology coupled with the global credit crunch, which saw bank lending tail off and alternative sources of financing come to the fore, created the perfect conditions for their launch.
However, while FinTech is very high-tech and has the appeal of being new, let’s not throw the baby out with the bathwater. IT opens the doors to so much, but IT on its own is no substitute for a personal, face-to-face and more bespoke financial service.
When you look at what FinTech companies offer, it all sounds very familiar: money lending via the likes of peer-to-peer lending and equity funding, payments, currency exchange, portfolio management and wealth management. All of this, and more, is offered by the more traditional financial services businesses, and tradition is what many people will still want.
FinTech businesses are here to stay and are a welcome addition to the financial services sector but it is important to remember they form just part of the mix and aren’t a substitute.
For a personal , face-to-face financial service please get in touch with the team at Hartsfield.Tags: FinTech, Hartsfield Financial Services
Categorised in: IFAs
This post was written by Paul Verwoert