Despite the looming threat of Brexit, 2017 has been another tremendous year for fintech in the UK. Since it began, more than £1 billion of investment has poured into the country, and most notably, into London – more than double the amount compared to the same period last year.
It should not surprise anybody; fintech is, often quite literally, a big deal over here – the hottest ticket in town. In fact, there are only 3 cities in the world – San Francisco, Beijing, and New York, who are attracting more VC fintech investment currently than London, which is ahead of the likes of Mumbai, a city increasingly pushing the cashless agenda, and Singapore, one of Asia’s most exciting fintech hubs.
What areas are VCs, angel investors, and even the big banks themselves, investing into?
There are the challenger banks; mobile-only accounts that process your purchases immediately and show you your real-time balance, as well as helping you save with AI driven reminders or automated processes such as auto-sweeping extra savings into a separate account each month.
Disruptive money transfer services, such as TransferWise, Revolut, Azimo, WorldPay and many others are enabling people to make overseas money transfers at a fraction of the price they are used to paying banks for the same service.
Bitcoin exchanges, blockchain based Software as a Service plays, insur-tech, trading and investment apps, mobile payments services, the cashless society, bill management, risk management – even the legal industry – all of these fields and professions are being disrupted by faster, more efficient fintech based alternatives, that crunch the numbers and use algorithms and machine learning to deliver a more personalised product and a higher standard of customer service. Despite being virtual?
What this shows is that the public, not just in the UK but all over the world, are responding in a positive way to the innovations that fintech firms are offering. Without the strong evidence of consumer backing, after all, investors would not be making such big bets on the future of fintech.
These bets are also a bet on the future of the internet. Over the past decade, we have experienced the rise and rise of the FANG companies; Facebook, Amazon, Netflix, and Google. These online specialists have become some of the biggest companies in the world in what feels like the blink of an eye.
The days when analysts looked suspiciously at Facebook’s IPO price and wondered how the company would make their money, or if Amazon could be more than just an online bookstore are long gone. History teaches us the answer that they did, and they could.
But the online landscape looks very different from the perspective of a disruptive fintech firm. We are discovering more and more, thanks to a series of hacks and leaks, from the WannaCry virus, to the Ashley Madison “affair”, that, although it can do very useful things, the internet is not always a great place to be spending your time, or sharing your personal details. Until recently, the FANG companies had done a very good job of disguising this inconvenient truth – that the world wide web is not too dissimilar to the old Wild West!
It’s not unusual for many casual internet users – people who only leave the relative safety-net of their social networks or work dashboards when they need certain things and know they are more easily searched for and bought online, to have poor experiences.
It’s not Google’s fault that it does not always deliver exactly the results that we want, and it is not the search giant’s fault that there are bad people online – but for the first time in a long time, people are beginning to ask – is Google really my friend?
Looking at it another way, why can’t there be more tailored search and comparison engine’s online for users who do not wish to venture outside of their online comfort zones? Users who want to put up a layer of protection between themselves and the worst of online; the hackers, the scammers, the phishers and so on.
A service that conducts searches on Google on our behalf, for example, is trusted by us to show us the best of the web, and able to store our personal data for us securely and only use it when they are given express permission.
Now that we have become more intimate with the internet, its services and products are becoming less of a surprise to us – there is little point in “surfing the net” these days, we just want to be directed straight to the services that we use – the ones that work for us.
This is because we are now experiencing the internet not as a phenomenon to be explored, but a useful lifestyle management tool, and that means if it is safe and secure enough we will consider using the internet to handle our finances.
In 2018 we will see 2 very clear trends emerge within fintech; the first will be created by the establishment of the new payments services directives, PSD2, which will allow any digital firm to access customer’s bank account details, provided they have the customer’s permission.
Literally any firm that receives permission can use APIs to provide customers with fintech style services; but the ones that will succeed that will be those that give customers genuinely useful information and advice on top of just data – that are more than just a crafty gimmick.
These kinds of platforms, or “digital dashboards”, can save casual internet users time and energy by doing their searches for them, ahead of time, and providing them with the services they need, when they need them. This can be anything from arranging car insurance, to reminding somebody who plans to make an overseas payment that the exchange rate is currently moving in their favour, to advising which card or account or e-wallet they should use to get the best credit rating.
The second trend that will emerge is that it will become increasingly normal to store all of your financial information online, and take it with you, virtually, wherever you go. This will fundamentally change the way we feel about finance.
Banking used to be about visiting a physical store, opening an account with 3 proofs of address and a passport photo, and keeping all of your paper receipts in a safe and dry place. But soon there will be no requirement to do any of that.
The best digital dashboards will take all of your financial data, analyse it against anonymised data stored in the cloud, study the financial markets, calculate risk, and present you with the best possible range of options – which you will be able to buy, sell, swap, or exchange for all kinds of different financial rewards.
Digital dashboards are set to become the new butlers of the internet, doing our “dirty work”, searching, comparing and paying securely – for us.
Remember the search platform “Ask Jeeves”? The truth was, internet search tools could not really help us make decisions a decade ago. Now, thanks to advances in AI, they can. And starting from next year, when PSD2 is introduced, they will.
“Googling” services online will become a thing of the past.