5 Areas of Fintech Attracting Investment
19 July 2017
In just a short while, Fintech has absolutely revolutionised the financial services and banking industries, particularly here in Scotland, where there have been a number of exciting start up companies taking the market by storm. Emerging markets, in Asia and Latin America, have also managed to raise record numbers of investment funding to ensure a tangible presence.
One in three consumers are now accessing Fintech products on a regular basis. More and more people are now turning to online banking or apps in order to access a range of financial services and products. The UK currently has a 42% adoption rate of fintech technologies, with 50% utilising Fintech money transfer and payments services.
Unsurprisingly, it is the Millennial age bracket that is making the most use of Fintech. Most importantly, the market is showing no signs of slowing down. Here are five areas of Fintech that are driving growth and attracting investment.
Insurance is one of the oldest businesses around – and insurtech plans to disrupt this with exciting new innovation. Insurtech is designed to eke out savings and efficiency from existing insurance industry models. It’s an industry that was slower off the mark than Fintech, but venture capital investment in Insurtech companies doubled last year to almost $1.2 billion – meaning the market is about to mushroom.
Last year, many banking institutions couldn’t wait to boast about their flirtations with blockchain technology. There is huge potential for blockchain to massively disrupt the industry – with several banks toying with the idea of using the technology to create digital currencies similar to Bitcoin. Venture capital investment in blockchain companies rose to almost $544 million last year.
This is an issue that has forced its way to the front of several news headlines, thanks to security breaches on the NHS, Yahoo and the Bangladesh Central Bank. In the case of the Bank, $81 million was stolen by sophisticated cyber thieves. With ever-evolving technology, the threat of hacking is only ever going to grow. Investment in cybersecurity stood at $3.1 billion last year – a figure that is likely to increase should other attacks occur.
HSBC have already launched their voice activated banking software, making it easier than ever to access your accounts via phone call or app without having to remember complicated passwords. It is very much playing on the trend for voice-activated software that already exists in our mobile phones or in products such as Amazon’s Alexa. The Fintech industry is likely to capitalise on AI, utilising it for the more menial tasks usually undertaken by employees.
China has emerged as a real contender in the Fintech market, investing heavily in the technology needed to compete with existing efforts. Last year, total Fintech investment in Asian markets came in at a record high of $8.6 billion – proving that the country is taking this seriously. Owing to this, China has been able to consider itself one of the largest Fintech economies in the world, alongside America.
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Written By Shona Preston