It’s fair to say we are living through history at present; a time of unprecedented economic, political, social and technological upheaval and change. Brexit looms large on the horizon, while each election throws up a surprise in most countries.
However, the financial sector – and the burgeoning area of fintech in particular – remains bullish. Only coined as a term in around 2012, fintech is leading the charge to offer consumers more choice and control and drag the financial world kicking and screaming into the 21st century.
At the recent Wired Money conference in London, I heard first hand from Eileen Burbidge, Partner at Passion Capital and advisor to the UK Treasury, who gave her predictions for the immediate future of fintech.
Banks and the back end
In recent years, financial start-ups and challenger banks have been focused on the front-end user experience, but Burbidge expects a full stack approach to the back end to become increasingly important, and used the example of Salesforce giving order to the internet in 1999 by enabling businesses to take more control of their online data and make sense of their information.
Artificial intelligence and machine learning will be transformational for the world of fintech, and over time impact the banks’ approach to credit and risk.
Indeed, for Burbidge, traditional banks are integral to fintech, and certainly not mutually exclusive to emerging technologies and players. For example, while the likes of CurrencyWise are blazing a trail for the new world order, they are reliant on established banks to operate.
Of course, at the heart of fintech is the consumer, who will expect better value, experience and control of their data – especially as, by 2023, 50% of the population will be of the millennial generation or younger.
That said, inclusion is still an issue for the sector, with large numbers of people, even in developed countries such as the UK, living their lives without a bank account, and seemingly outside the accepted norms of society. More needs to be done by the sector to help these consumers and ensure they are given access to the right advice, especially regarding savings and investments.
Burbidge sees cyber security as an area that is “grossly underfunded”, referencing the recent attack on NHS systems as a reason to invest more heavily in this area.
Cause for optimism
But there is much to be positive about, especially in the UK. Regardless of Brexit, London remains an attractive place to do business – not least because transactions can be settled in both the Far East and the Americas on the same day.
In addition, the UK’s financial regulatory system is world leading, putting London in particular in a very strong position. Burbidge expects London to remain “the financial capital of the world” in the short term – and for the long term too.