Niche areas that FinTech is yet to exploitMay 21 2019
Fintech may now be mainstream, but in many respects it still has a long way to go. There is huge potential within existing markets. But are there other markets that are, as yet, largely untapped?
Last year, investment in financial technology hit an all-time high. According to Hampleton Partners, investment in fintech start-ups reached a record $31 billion (£24 billion) in 2018, more than double that of the previous year, and there’s no sign of this trend slowing down. Technological advances, less reliance on legacy systems, combined with a new, hungry generation of tech-savvy individuals driving demand and design, will all spur on growth. Over the next few years, the number of financial executives working with fintechs will likely grow apace.
But some think the fintech revolution has hardly started.
The most visible evidence of the use of fintech amongst the banks is the digital services they offer to customers – mobile banking being the prime example. This emphasises both the power of the consumer and the strength of the disrupter firms driving the fintech revolution. As increasing numbers of tech-savvy millennials enter the workplace, consumer demand and heightened digital expectations will only grow.
Mobile banking, with its capacity for users to manage their finances from their smartphone, has huge potential. The number of worldwide users this year is expected to exceed five billion, and when those users are offered a financial service, their first question will be: “Is there an app for it?” And let’s not forget the almost two billion adults – 42% of the global population – who are yet to join the global financial system.
Fintech’s value, according to Sir Mark Boleat of the City of London Corporation, is in how it is supporting both the economy and society by creating financial services that are fairer, more transparent and more inclusive. With mobile fintech offering automated, accurate and secure financial processing at the touch of an app, no wonder the banks are going mobile.
To be accessible to, and useable by, individuals or businesses with no financial experience or expertise, is what makes FinTech a real driver of change. Freelancers and small businesses are enthusiastically adopting FinTech solutions specifically designed for them to manage their accounts, saving time as well as money on accountancy fees. Players such as the Coconut current account and Albert accounting app (now owned by Santander) have already pounced on the freelancer/SME market, but are there any under-served customers unreached as yet by FinTech?
The millennial “techsperts” don’t always have the specialist sector knowledge and experience to identify the industries where these solutions are required, and one such underserved industry is superyachts. It may seem an exceptionally niche market, but these vessels have turnovers of millions and should be viewed not simply as luxury superyachts, but as floating multi-million-pound businesses.
Yet many superyachts still rely on antiquated accounting systems. The fintech industry is one of the most digitally advanced, and the superyacht industry one of the most technologically cutting-edge, but the two ships have hardly begun sailing together.
Superyacht captains often oversee expenses that add up, not to hundreds or thousands of pounds, but millions, and they can find themselves wading through physical receipts, before inputting that data into Excel which is then emailed to the yacht’s management company or family office every month.
It’s not just the superyacht industry that this applies to – Aviation, Formula 1, and management companies overseeing chart-topping bands also have expenses that can equate to the turnover of an established SME.
And as with the yachting industry, such companies operate in many different countries which means they are potentially losing a lot of money to poor FX rates. The multi-currency flexibility that fintech offers has the potential to save them significant sums.
But it’s not just about saving time and money: the buzzword of the age is transparency. The top people in these industries are unlikely to be using the technology themselves, but they want to know how their money is being spent. If they can see their personal accounts in real time, they’ll want to see their expenses and expenditure related to their private jet in real time too, for example, and fintech enables exactly that.
Even more important, perhaps, for these high-end industries are the security benefits fintech offers. The data involved contains valuable private, and potentially highly sensitive, information – a tempting spoil for cybercriminals. So, the added security that comes with systems using secure encryption methods is a solution these industries can’t afford not to embrace.
As we enter the next age of fintech development we will increasingly see complimentary technologies – as outlined above – working together to solve niche markets provided by companies with inside knowledge. For example, Voly, which currently supplies the superyacht industry, already provides a fully integrated system including accounting software, payment platform and a multicurrency offering. Fully integrated tech is what these markets demand.
There may be a buzz around FinTech offerings for freelancers and small businesses. Maybe it’s time that buzz extends to their high-end counterparts as well.