The past decade has seen an explosion in new financial technology (or fintech) companies. In the UK, they have attracted more investment than any other industry, and are considered the most likely to survive the brutal startup scene.
First of all, what are fintechs and why are they so exciting? They are basically any financial services company that uses technology to exploit a gap in the market. The ones that get the most hype is those that offer services to ordinary people like you and me – like the app-only banks Monzo and Starling, who offer a better digital experience than those on the high street.
Some of them are even playing alongside the big investment banks in the City. For example, a company in London run by Zar Amrolia automates trades worth billions of dollars every day, using its own algorithm.
The point is, fintechs are everywhere, they are making money, and they are influencing how we use our wallets.
In this article, we will go through the ways fintech companies have changed how we think about our money and introduce some of the leaders and startups making waves.
They’ve educated us
When the big banks started to lose customers to the more exciting challenger banks, they knew they had to up their game. App-only banks like Monzo and Starling gave us an insight into how much we were spending and where we were spending it, offering budgeting advice and tips and tricks.
With the money we saved, we could start using it to make more. Ben Stanway and Charlie Mortimer co-founded Moneybox in 2015 with the simple idea to round up our spending to the nearest £1 and deposit the difference in an investment account. Their competitor, Nutmeg produces content that teaches us ordinary folk all about investing, in simple language.
The unknown world of investing has been revealed, no longer something restricted to the suits in skyscrapers.
They’ve made us think about the future
We can thank the rise of data for the rise of fintech startups this past decade. Couple this with Open Banking which has allowed third parties to access bank customer’s financial information (securely, don’t worry) and offer highly personalised services.
With so much data, companies are improving the kinds of services that look far into the future. And so, it’s now easier for us to think about our own futures, all the way to the end of it.
Dan Garrett, co-founder of Farewill, organises wills, probates and funerals, which for most of us can be the biggest financial decisions of our lives. And London startup Anorak uses data science and machine learning to help customers find the life insurance policy that suits them best, while educating them with easy-to-read guides. With fintechs like these, we can organise our affairs without expensive trips to solicitors.
They’ve made life easier
Banking and finance pre-financial crash was a slow and frustrating experience. Using precious lunch breaks to go stand in the queue at the bank. Sitting on hold for hours just to make a transfer.
Entrepreneurs saw what was painful and fixed it with new technologies. Now you can transfer money abroad in a few minutes with Transferwise. You can organise a mortgage and get it approved instantly with Habito. And you can keep all your pensions from various jobs in one place with PensionBee.
Today, it’s not just the startups making life better. The entrepreneurial spirit of the last few years has forced the entire industry to level up. Though big and slow, traditional financial providers like Natwest and Barclays have taken note and introduced many products and services that emulate the startups. Their apps show you how you’ve been spending, letting you put budgets on different expenses. With Open Banking, they are slowly morphing into financial platforms, curating personalised services from all kinds of companies.
We’ve yet to see the full extent of what creative and dynamic people in the finance industry can do with data and technology. Ideas will come and go, and fortunes rise and fall, as they always have. As long as the philosophy is to improve lives and safeguard our financial futures, we are happy watching the relentless progress of the fintech story.