The term 'Fintech' is derived from the words ‘financial’ and ‘technology’ and is used to describe the emerging start-up technology companies that are influencing and disrupting the financial services industry. The services that are being disrupted most by Fintech include mobile payments, money transfers, loans, fundraising, and so on.
The proliferation of the smartphone has drastically changed consumer behaviour, creating a culture of ‘always online’ users. Online services and apps have widened the scope of what users expect to be able to access and action, and when. This has inevitably influenced banking and financial services, where Fintech can generate considerable savings through agility, an ability to innovate and adapt, and there relatively small size in contrast with the operations of traditional banks.
Two examples of Fintech’s influence include:
- Crowdsourcing through services such as Kickstarter, enabling people to acquire funding quickly and easily.
- The cross-border transfer of money, through services such as TransferWise, which allows SMEs and individuals to transfer money far more cheaply and quickly than was previously possible.
In the construction industry, Fintech has begun to influence processes such as payments and supply chain management. For example, an Australian Fintech platform Progressclaim, has enables building contractors to administer payment claims, avoid disputes and reduce processing costs.
Both contractors and subcontractors collaborate on a single neutral platform that provides a central communication mechanism for the contractor to value work and approve subcontractor payments quickly and accurately, improving the management process throughout the supply chain.
For more information, see Progressclaim.
On 6 December 2017, HM Treasury announced the launch of The Challenge, a competition offering budding entrepreneurs the chance to win £2 million. The prize will be awarded for the development of an application to use rental payment data to improve credit scores and mortgage applications for Britain's 11 million renters.
Winning bids will be selected by a panel of leading figures from the Fintech sector, and an initial round of grant funding will be provided to six proposals, helping to turn the ideas into workable products. These six will then be whittled down to a handful of teams who will receive further funding and support to bring their ideas to market.
The Challenge will open to applications early in 2018, and development will conclude in October 2018. For more information, see here.
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