Finance and technology have been intertwined for at least the last 150 years, when banks in France began using a cousin of the telegraph machine to verify transactions across different locations. Since that time, financial technology, or fintech, has brought about many changes in the way we invest, borrow, save, and pay for things. Credit cards, ATMs (originally introduced as “robot cashiers”), and the NASDAQ all are applications of fintech. In 2015 fintech reached a new milestone, as the number of people who used mobile banking surpassed those performing transactions at a physical bank for the first time.
Global investment in fintech topped $22 billion in 2015, which was 75 percent higher than in the previous year. The first quarter of 2016 showed that the pace was accelerating even further this year. What will this tidal wave of investment bring to businesses and consumers?
As with other technological developments, some fintech advances quickly become household names once they are widely adopted, and people can't remember how they got along without them. Amazon, PayPal, and eBay were made possible by fintech applications in e-commerce, CRM, and online payments. All three are now Fortune 500 brands. Fintech platforms allow us to deposit checks without going to a bank and also make it possible for the biggest taxi company, Uber, to own no cars, and one of the biggest hotel companies, Airbnb, to own no hotels. New technologies in mobile payments, inventory and workflow management, and lending have boosted the peer-to-peer and “gig economy” markets.
Analysts have noted that many fintech projects that begin as “disruptors” to traditional banking and financial services often are acquired by them or otherwise aligned - ultimately expanding functionality and service offerings available to end users. The imagination of business leaders can guide us in any number of new directions. “New frontiers ... are bound less by geography than by the industry’s ability to adopt and scale clever ideas that improve service and efficiencies,” said Richard Lumb, group chief executive for financial services at Accenture.
It isn't always easy to know in advance which fintech advances will evolve into commonplace applications, but in recent years we have seen the rise of crowd-funding for both charity and business in the form of Kick-Starter and GoFundMe. There has also been a trend toward mobile lending, where brands like Rocket Mortgage from Quicken make it possible to apply for and close a home loan without meeting a lender face to face. Several developers offer a version of mobile portfolio management software, though that space seems sufficiently open for a company to establish itself as a go-to brand.
One way for fintech to make a meaningful impact is to improve upon existing processes, rather than to invent new ones. This may mean adding speed, convenience, or accuracy to the current way of doing things. For businesses seeking additional or more immediate cash flow through factoring or asset-based lending, fintech may make it possible to perform valuations and quotes remotely, shepherd paperwork more quickly, or disburse the proceeds of a transaction without an in-person closing. Generally these kinds of tweaks will lower costs or increase revenues, making them attractive to businesses.
With a boost from mature fintech it is now possible to run a large enterprise with minimal physical space, minimal capital equipment, and a decentralized labor force that can serve many different markets. Businesses now have many tech-backed options when it comes to securing financing, sourcing parts, labor, and real estate, paying suppliers and workers, and accepting payments from customers. A new generation of start-up fintech firms has begun offering services traditionally offered by banks – and doing it more affordably. Perhaps just as importantly, a generation of established financial companies has adopted fintech to enhance their services, and increase their usefulness to their business and individual clients.
About Bibby Financial Services
Bibby Financial Services is a leading independent financial services partner to more than 10,250 businesses worldwide providing more than $11.6 billion in funding globally. With over 44 operations in 13 countries spanning Europe, North America and Asia, we provide asset-based lending and factoring solutions to help businesses grow in domestic and international markets. Established in 2001, Bibby Financial Services North America has seven offices in the U.S. and Canada that support businesses in virtually any industry. We hold memberships in the Commercial Finance Association, the International Factoring Association, and the American Finance Association. Bibby Financial Services is part of Bibby Line Group (BLG), a diverse and forward-looking family business with over 200 years’ experience of providing personal, responsive and flexible customer solutions. To find out more about Bibby USA and Bibby Canada, please visit www.bibbyusa.com or www.bibbycanada.ca.