Is your company ready for FinTech?

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Financial technology, colloquially known as FinTech, describes a range of different digital platforms that aim to make routine, often mundane, business tasks easier and simpler to complete for the user.

Stretching from PayPal and internet banking to crowdfunding and trading, FinTech has in recent years seen a rapid resurgence, much thanks to innovative start-ups and the willingness of high-profile investors to plough money into burgeoning technologies. But the persistent threat of internet hackers to personal and financial information means new technologies must be both extremely reliable but disruptive enough to breakthrough into public consciousness – a tough balance to strike.

The UK and evolving technology

The UK is aiming to play a key part in the evolution of technology, as reflected by Mayor of London Boris Johnson opening Europe’s largest FinTech Accelerator Space at Canary Wharf last year,  providing a venue for businesses to create, test and market financial technology.

In fact, financial technology is one of the UK economy’s strongest areas, encompassing much of the financial system. VentureSource revealed that investment in FinTech surged by 177% in the first quarter of 2014 compared with the same quarter last year. Moreover, Accenture reported that since 2004, 53% of Europe’s FinTech deals have taken place in the UK and Ireland, with global investment in financial technology reaching $2.97bn in 2013.

The main benefits

The main benefits of FinTech are that it allows entrepreneurs to undertake key financial transactions, analysis and logistics for their businesses without spending millions of pounds or manpower, saving both time and money.

Projects focussing on all elements of the business have sprung up across the Isles; from customer billing system Brite:Bill and CurrencyFair aimed at providing the public the same exchange rates for international currency as banks, to invoicing firm Invoiceable.

Additionally, FinTech is particularly useful in enhancing the customer experience and building a valuable relationship between businesses. For example, Google has enabled customers to activate a new plastic Google Wallet debit card within its mobile app, while American banks JPMorgan Chase and Wells Fargo have added happy birthday message software to its ATMs and online banking systems.

Innovation brings risk

Michael Backes, co-founder of innovation laboratory Liquid Labs, explained that traditional values of trust and cooperation between system providers and businesses are harder to gain using FinTech. “As more startups develop disruptive FinTech products and more “non-financial” people are drawn to the sector, we may see some instability in the future. Innovation brings risk and people make mistakes, so inevitably there will be more MtGox-style flops (the Bitcoin exchange was subject to an apparent $480m digital heist). These failures will, in turn, make it harder for new products to gain mainstream adoption as consumers become more wary,” Backes said.

Do you like to stay on top of the latest technology trends? Read this article from Dean Evans on what tech trends to watch out for this year. 

Jermaine Haughton is a journalist and digital media professional.

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