Fintech for the Future

Fintech companies are revolutionising the financial services sector with technology, offering new products for consumers and exciting job opportunities for techies

Going on holiday soon? If so you may benefit from a rather clever foreign currency service by British startup Revolut. You get an app, plus an optional credit card, which allows you to make payments in multiple currencies with zero fees and zero spread. Revolut means tourists can avoid getting gouged 20 per cent by money changers. The concept is so good Revolut has won £1.5 million in funding from Balderton Capital. The old foreign exchange companies must be wondering how they’ll make a living.

Revolut is just one of the stars in the fintech galaxy. As the name suggests, fintech is the industry where finance meets technology. And it is, in the opinion of the British Banking Association, a revolution.

There is a rash of new mobile-first banks. Atom Bank will have no call centre and no branches; merely an app. The back-office infrastructure will be bang up to date. Not like the creaky Fortran-based systems from the 1980s you’ll find at the current high street banks. Secco Bank will offer account balances through social media.

Fintech is changing every area of asset finance. Nutmeg is a user-friendly asset management startup. There’s no paperwork to sign up. An account can be opened online in minutes. Then users can select a portfolio based on their risk appetite. The old independent financial adviser model, where customers sit in an office and get paper brochures shoved under their noses, looks obsolete.

Lending is being done peer-to-peer, via fintech ventures such as Zopa and Funding Circle. Both the investors and borrowers get better rates by cutting out the middle man.

Accounting is now paperless and automated. FreeAgent is a cloud-based accounting service for small firms. For invoice processing there is Receipt Bank. Got a bill? Just take a photo of it, and Receipt Bank converts it to text and feeds the data into your system. All the big four accountancy firms use it.

The UK is the home of fintech – the powerbase of the City of London, fused with the entrepreneurial energy of the capital, is proving a potent combination. Last year, 42 per cent of fintech investments in Europe were in the UK and Ireland, and 80 per cent of the venture capital cash and 70 per cent of all these deals were in London.

Naturally, fintech companies are hungry for talent. Take a company like TransferWise, founded by former Skype employees Kristo Käärmann and Taavet Hinrikus. The business model allows companies swapping currencies to find a counterparty making the same deal the other way. So no fees. TransferWise handles 300 currencies, is valued at $1 billion plus and employs 450 staff. There is a big cohort of coders. At the front end these include JavaScript and CSS developers. They work with full-stack developers and database engineers. Sysadmins (or system administrators) keep everything ticking over.

In fintech there is a lot of compliance work. Anyone dealing with customers’ money needs to understand the Financial Conduct Authority’s banking regulation, as well as data protection legislation. Chartered Insurance Institute and Chartered Institute for Securities & Investment qualifications are highly regarded. Since companies expand internationally, mastery of the national regulations of other major markets is in demand too.

Fraud is a concern. In fintech, data plays a central role, so there is an overlap with that other red-hot sector, data analytics. Data scientists with a knowledge of Hadoop, Pig, Jive and other big data disciplines will find themselves coveted by fintech companies. Presenting findings is also crucial, hence the need for designers with familiar chart tools such as Tableau, QlikView, SAS Visual Analytics and Opinurate.

It is important to note that the big high street banks are not standing still. They see the challenge posed by fintech startups and are moving quickly to modernise. Santander has a $100 million venture fund to invest in fintech companies. Citi has accelerator funds in Israel, Singapore, the United States and Ireland. Barclays offers free workspace and mentoring for the most innovative companies in London.

Fintech will mean big change for these banks. They are competing for coders, compliance offers, and data scientists, and they’ll need project managers and change managers to handle the restructuring. The CBI reckons UK financial services firms will be spending 75 per cent more on IT to cope with the transition to fintech.

Not everyone will be a winner. The rise of fintech means bank tellers have a dim future. Accountants using paper processes will seem archaic. Bookkeepers are almost certainly going to struggle as everything moves online. But Martin Hook, Ayming’s UK managing director, expects demand for accountancy and specialist advisory services to increase as a result of fintech. Clients are crying out for help in making sense of the vast array of new services that are emerging. Accountants and specialists are well placed to advise, he says. The fintech era is going to bring incredible products to consumers and change the way we think about money and banking. The recruitment market will need to work hard to keep up.

“The UK is the home of fintech – the powerbase of the city of London, fused with the entrepreneurial energy of the capital is proving a potent combination”

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