According to a recent Deloitte report, EU banks are keen to collaborate with the new stream of FinTech providers who are heating up the financial services market.
Instead of developing in-house products themselves, banks are flagging behind on innovation and only account for 19% of the $10 billion spent on FinTech last year.
The report suggests that banks have seen organisations like PayPal take over front-end payment initiation and processing services. The financial landscape is changing and banks no longer control this arena with
- Around 25% of European retail banking revenues (€128 billion) likely to come from the payments market this year
- Fees relating to cards and current accounts expected to make up 21% of this revenue
- 44% coming from interest and 35% from transaction charges.
Regulation, technological innovations and evolving consumer demands are considered to be the driving challenges due to:
- Stricter banking regulations which have led to more advantageous conditions for non-bank payment providers, including FinTech firms
- Technological advancement which now encourages Agile entrepreneurs to enter the payment initiation market
Consumer preferences will inevitably change as the use of digital tools become increasingly commonplace.
Financial technology is a rapidly evolving area with new and ground-breaking solutions which will enable consumers and businesses to choose alternative ways to access payments and financial services networks.
Industry collaboration with fresh e-commerce start-ups and internet finance companies is therefore a viable and cost-effective way to develop this changing infrastructure.
And the UK is currently the best place to be. Government figures indicate that London currently houses over 44,000 FinTech workers and over 155,600 digital technology professionals; beating Silicon Valley and New York. In fact, London FinTech investment is growing faster than anywhere else in the world, with experts citing that this is due to the City’s convergence of talent which appeals to FinTech entrepreneurs.
More than half of all FinTech investment in Europe is channelled into London. The Government, which continues to champion nationwide collaboration, is keen to promote London as an interconnected hub of talent and ideas which can then branch out to other cities due to its superfast broadband and comprehensive transport network.
TransferWise (“Money without borders”), Funding Circle (the Government’s investment lender of choice), Aire (intelligent credit scoring) and Nutmeg (digital consulting) were all borne out of the recent explosion of FinTech start-ups.
Final Words On FinTech Providers And Emerging Trends
If your business can find a niche payment system then it is certainly worth exploring. Choose advisors who are genuine FinTech experts, understand your business and appreciate the importance of the bigger commercial picture.
Article written by Rachel Furniss.
This article is provided for information purposes only and should not be construed as advice of any nature. The views and opinions expressed are subject to change without notice.
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