What is FinTech?
FinTech stands for Financial Technology and refers to technology, systems, and companies that are in a financial sphere. FinTech can be physical, or it can be online. For example, an app counts as FinTech as much as a physical piece of technology used to send and receive contactless payments. However, financial technology can also refer to things like cryptocurrency, a totally online set of systems. An interface is still necessary, but cryptocurrency shows that FinTech can denote a totally online system. So, what has FinTech done to change how we handle our earnings? Revolutionising Payments You will already have noticed the changes financial technology has made in your life. Contactless payments became vastly more popular in 2017, and that’s thanks to innovation in FinTech. With the use of NFC (near field communication), it became possible to encrypt payments from phones and debit cards so that user data could remain anonymous. With this change, how we handle currency took another step towards being totally online. As well as this, apps such as PayPal have also helped fuel a FinTech revolution. In fact, FinTech has totally changed modern banking. Now it’s possible to split a bill, order a service, or send money to someone with a few simple touches. Even a fingerprint or facial recognition software can help you pay for goods and services, or help you send money to a friend or family member. FinTech has sped up how we pay for things, and how we handle those payments. Gig Economy and Crowdfunding Gig economy is part of the 21st century. It’s easier now than it has ever been to order a service online from a range of talented individuals, whether that be an Uber to the airport or a new logo designer on Fiverr. Gig economy is helping drive wave after wave of financial technology and banking innovation. As it’s so simple to order these services, financial technology companies and developers have to stay ahead and keep sole traders in mind to maintain a streamlined and effective service. For example, if a FinTech company wishes to compete with PayPal, they can’t do so without keeping the gig economy in mind as PayPal is helping keep transactions simple. Crowdfunding websites fall in between these two as they can be categorised as FinTech. Crowdfunding sites act as a middle-man so that a community can help fund something they’re passionate about, or help realise an innovation. This helps a project come to life, as well as promising a return on investment for an investor. FinTech and PropTech Similar to with the gig economy and crowdfunding, FinTech is also helping to fuel a boom in PropTech. The trend is clear, financial technology helps with transactional processes and makes them more accessible. With crowdfunding, anyone can be an investor, and it’s no different with PropTech. FinTech allows simpler transactions so that it’s possible for people to own multiple properties and leverage their assets against their mortgage by renting them out. This wouldn’t be possible without waves of innovation in FinTech, IoT, PropTech, and banking as a whole. Therefore, financial technology is giving everyone the ability to earn more and innovate. FinTech isn’t alone in this, though. The progress within PropTech, gig economy, crowdfunding, online payments, and the new ways we can make money and buy and sell services is all moving forwards in tandem. This forward momentum will continue and allow us to spend smarter, and simpler.
How FinTech is Changing Modern Banking
Banking used to be a lot more complicated. Even looking back to ten years ago, it was mostly either offline, in person, or on paper, with online banking being limited. Since 1981 you could access your accounts by phone, and since 1994, online, but this was so limited that it was easier to leave the house and go to the bank. Now, FinTech has totally changed how banking works and continues to do so. Comparing phones in 1981 to the computers we have in our pockets may feel superfluous. Still, the ways FinTech is developing the culture of buying, selling, and lending is very, very different to phoning up and asking to hear how much you have. Innovation has driven the banks into a FinTech mindset, rather than one of spreadsheets, pens, and paper. Now, no matter who you bank with, it’s likely you’ll be able to see your bank details on your phone after a quick passcode, face-scan, or fingerprint. How will these developments continue to change modern banking? Even the most well-established banks may fall prey to the ease of banking newer FinTech companies, such as Revolut and PayPal, provide. FinTech, Customer Retention, and Online Culture Buying, spending, splitting bills, and sharing money has never been easier. Thanks to developments in Near-Field Communication (NFC), owning a debit card isn’t necessary for a trip to the shops. This kind of ease of use is what consumers are looking for. FinTech apps almost completely remove the red-tape involved in opening a bank account. Now it’s easier to switch your current account than ever. A shift in mindset has happened. Instead of just retention, now acquisition is a lot more common. Now in 2020, it’s much more likely people will cycle through current accounts at different banks to reap every switch reward possible. FinTech innovation and start-ups have helped create and manage this mindset. Instead of entirely focusing on retention, rewards for shifting have become a lot more enticing, and it has become a lot easier to move a current account. FinTech startups used a business model to entice customers and use their money as an investment for scalability. Now that these businesses have scaled they’re directly competing against more well established banks, largely because there wasn’t any bureaucracy stopping them from moving to an online platform. It’s clear from blockbuster, self-checkout machines, and online banking that modern consumers want to be able to do as much as possible online, without getting slowed down by the possibility of human error. This means the FinTech startups could benefit and reap the rewards from being allowed to start with an online platform, entice customers with older banking processes, and retain them longer by challenging the rewards modern banks are offering. The change here is that rewards to switch are getting more aggressive, and the ability to switch has come full circle, and has simplified further. Exchange Rates and Costs FinTech startups, such as Revolut, also apply to a modern market much more than old-fashioned banking practices. Revolut removes fees for spending online, something you can expect to see in major banks at some point in the future. This is another benefit FinTech startups have had over major banks. As they’ve been able to build from the ground up, they’ve been able to fit around a modern customer a lot more. Whether it’s a simple feature to help you “split the bill” with PayPal, or if it’s reducing exchange rate fees, these features apply much more to modern consumers. Moving forward, this may not even only apply to travel. It’s not uncommon for someone to be paid in dollars but work half the world away. PayPal is one of the preferred methods of payment in a gig economy, and so, while there’s no exchange rate for paying for an Uber or instantly purchasing a train ticket, there is if you design logos. Exchange rate fees don’t make as much sense as they used to in terms of the modern consumer. Talent and Innovation At this point, it’s clear why FinTech startups have both changed and challenged modern banking. Their ability to innovate beyond the bureaucracy and red-tape of conventional banking has, in turn, forced conventional banking to change and innovate beyond their own bureaucracy. This innovation was driven by people, and not just banking experts. Innovations from FinTech have come from an ability to assess gaps in the market, think outside the box, and take risks that used to be impractical. Now, thanks to the talent that drove this innovation, we can pay for our shopping with our phones, split a bill, or step into an Uber without much additional hassle. It always has been the people behind the companies and their ideas that are changing modern banking. So, if you’re looking for talent to develop, change, and improve the face of FinTech or PropTech, contact us today.
The FinTech revolution is rising
FinTech is one of the world’s fastest growing and in-demand industries with a record-breaking investment of £16 billion in 2018. With 60% of people using online banking tools it’s no wonder new FinTech start-ups are emerging every day. The industry is growing at an accelerated speed. There are currently 76,500 employees’ in the UK FinTech Industry, which is set to rise to 100,000 by 2030. With these exciting figures, why is the FinTech industry feeling the pressure more than others and struggling to attract new, fresh talent? The FinTech Revolution is rising, but what about the recruitment? Whilst the UK has strong talent in financial services, market research has found we are lacking depth of tech and business skills. Especially so, when compared to other leading tech hubs such as America and Israel. The UK has little to no educational support or online courses for the FinTech industry. This has resulted in employers looking elsewhere and according to a Raconteur Report, 42% of Fintech workers are from overseas . The only solution here is to start adding to our standard curriculum. The UK needs to inspire students at a young age to look at this industry. We need greater collaboration between the education system and employers to bond and form relevant training programs that can evolve into FinTech careers. It is sad to say FinTech is also currently less diverse in gender than what would have been expected of an advanced, innovative industry. Only 29% of staff are women which is a dramatic difference to the UK’s Financial Services industry which was made up of 46% women in 2018. The FinTech industry does however offer a collection of benefits that are typically attractive to working women. These include remote working and flexi-time, but is this a result of the UK’s lack of FinTech educational support? With Brexit recently coming into action and the uncertainty of employer’s being able to recruit from overseas, FinTech businesses can’t afford to not face the facts. FinTechs should prepare for the worst. They need to find a solution through partnerships with a specialist recruiter who understands the industry and how to source the best talent on the market. Fintech is a competitive industry and business’ need to be able to attract and retain the best talent. With the current employment rate in the UK at 3.8%, we have found ourselves in a candidate driven market. Candidates have the opportunity to pick and choose the best offers available. FinTech companies need to be able to compete accordingly. Another problem that has arisen with FinTech Recruitment is London. It has always been a fierce candidate market, however now with a staggering 75% of FinTech companies based in London, its no wonder companies are fighting for candidates. To overcome this problem, FinTech companies need to be prepared to look beyond the M25 and at further locations to source the best talent. Larger FinTech employers have already implemented remote workers. This has been a huge success in the company Stripe. They hired 100 remote engineer’s last year, forming a ‘remote hub’. Stripe have so far found great success in this model and are now looking at expanding their hire’s even more. Implementing this strategy into Stripe has given them the chance to cast a wider net to find talent that is essential to their business. They would have never had the chance to hire these exceptional workers otherwise. So what’s in store for the future of FinTech business’ and their recruitment? It’s unclear to say which way the market will go, but it’ll be interesting to see how the industry will revolutionise ways to grow with the demand.