Nowadays, the UK’s financial sector is overwhelmed by the talks about the COVID-19 pandemic and Brexit. It is evident as the financial services of the UK contributed £132 billion to the UK economy in 2019, 6.9% of total economic output (UK Parliament). Yet, Fintech was not bandied about as it ought to be. It is one of the important sectors of the UK’s economy, making around 10% of the global economy (£11bn in 2019). Additionally, London became the second top financial centre after New York due to the advancement in the Fintech industry. Keep reading to know: what is Fintech, what is a Fintech company, and why Fintech matters to entrepreneurs?
The Fintech industry was worth £110bn in revenue in 2019 but recently COVID-19 pandemic has accelerated the technological use estimated around £95b for financial services. This rate is rapidly increasing as it is revolutionising the way people interact with financial services.
Let’s see what exactly the Fintech industry is.
What is Fintech?
Fintech or Financial technology refers to the process of using new technological advancement and the latest products and services in the financial industry to enhance and automate the financial processes. The Fintech industry has a broad spectrum ranging from mobile banking, insurance, cryptocurrency to investment apps.
What is a Fintech Company?
A Fintech company is such a type of company that integrates technologies like artificial intelligence, data science, and blockchain into the traditional financial sector for enhancing safety and efficiency. The growth of Fintech company in the UK is faster compared to other sectors. With Fintech, companies are innovating and growing rapidly in almost all areas of finance from payments, loans to stock trading.
Why Fintech matters to entrepreneurs?
The advent and rise of Fintech have revolutionised the way companies do business. Ranging from crowdfunding to mobile payments, there has never been as much choice and convenience to entrepreneurs before as there is right now.
Therefore, entrepreneurs need to utilise Fintech for providing faster, efficient, and secure services to their customers.
One of the best examples of Fintech is crowdfunding. Instead of the traditional banking practices, companies like Kickstarter, Patreon, GoFundMe, and others have made it easy to get funding for your business.
It provides an opportunity for the people to get quick funding for their idea, easily from anywhere in the world from the people that are anonymous to them. Instead of the traditional method of talking with the investors for months, crowdfunding is the internet shop window, whereby you can get payments within the matters of weeks.
2) Mobile Payments
Thanks to Fintech for providing us a convenient way to transfer money across the borders in a matter of minutes. TransferWise has surpassed the traditional and expensive ways of sending money anywhere in the world by allowing small business owners and individuals to transfer money at more cheaper rates.
3) Personal Finance and Savings
Fintech has introduced modern, user-friendly and easy ways of saving money without the hassle of paperwork and allowing customers to save alternative products and ways to manage their personal finances. There are a lot of transfer and money savings applications that are comparatively cheaper and convenient than the normal banking services.
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Fintech has drastically evolved the insurance industry. Insurtech offer wide ranges of insurance services from home insurance, car insurance and data protection. According to the estimates Insurtech companies like Oscar Health have got around $165 million funding in March 2018 with a total valuation of $3.2 billion. In addition, Credit Karma was valued at $4 billion as per the Forbes report in 2019.
5) Robo-Advisers and Stock Trading Apps
Robo advising has automated the asset management sector by providing algorithm-based asset recommendation, portfolio management and asset allocation services that have boosted efficiency and reduced costs. Entrepreneurs can benefit from these investment services for preparing an effective investment plan.
Quick Wrap Up
In conclusion, we can say that the rise of the fintech industry has made everything possible with automation, convenience, and promptness. If you’re an entrepreneur, you need to get help of a fintech company to improve your business operations and to be on the top.
Accotax has a team of professional bookkeepers, accountants and tax specialists who’re equipped with fintech to provide you with the best financial services that your business needs. Contact us right away!
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Disclaimer: This blog is just for your general information on Fintech.