The fintech sector has been undergoing incredible growth over the last couple of years. As reported by Accenture’s report on Fintech, global investment in fintech firms tripled from $4.05 billion (£2.6 billion) in 2013 to $12.2 billion (£7.8 billion) in 2014, with Europe (i.e. London) leading the rank. But how can be explained such astonishing sector’s growth?
- The economic crisis. The 2008 economic crisis and the turmoil it caused among some of the major banks likely played a double role in determining the birth and development of fintech. On the one side, it decreased people’s trust towards banks and financial institutions, which led them to demand more transparent and efficient processes; on the other side, many banks’ employees decided or were forced to change job and turned into skilled entrepreneurs. For the first time in many years, they were leaving their secure and profitable job and re-inventing themselves into business owners, exploiting the knowledge they had of the banking system and its inefficiencies.
- The boom of the smartphones and app markets. With more people owning smartphones, every sector saw an opportunity into developing an app to allow the user to conduct activities directly from its smartphone, wherever and whenever he wished. Fintech brought this possibility to the financial sector, which however reacted slower than other industries, and only in the last couple of years is getting up to speed.
- No innovation for many years. The financial sector has not seen big innovations for several years. This was probably one of the reason why they slowly reacted to the emergence of fintech. But once they understood the potential and the need of innovating their processes to be ahead of competition, they started investing and encouraging fintech innovations in order to regain time and competitiveness.
These are only a few of the elements that could explain fintech incredible growth in the last couple of years. Crowd Valley has been in the fintech sector since 2012, providing technologies for peer-to-peer marketplaces, including the recently launched API to power digital investing and P2P marketplaces.
One thing is sure: fintech growth won’t stop soon.
Image credit: Fintech, money, finance by Andre Gunawan, from "Tech in Asia".
About the author - Irene Tordera
Born and raised in Milan, Italy, Irene is an International Business graduate, with a strong interest for innovative ideas that can simplify our lives.
During her studies, she co-founded an online community for sportspeople and worked in marketing positions at Ogilvy & Mather Advertising and at the European Business Angel Network, in Brussels. She is a passionate blogger about crowdfunding and the startup ecosystem.