GLOBAL • FINANCIAL SERVICES
FEBRUARY 19, 2019
At the intersection of finance and technology lies a phenomenon that has been reshaping the world of money. The rise of the internet has brought about a high degree of disruption to almost all industries and financial services are no exception.
This dynamic intersection is called Fintech. Fintech stands for Financial Technologies. In its broadest definition, it refers to technologies used mainly by financial institutions, but also the technologies that are disrupting them, including mobile payments, money transfers, loans, fundraising, and asset management.
Fintech isn’t something that only banks and investors should be concerned about. It permeates almost every industry. Whether you’re a small business owner whose life has been made easy by Square, a child sending money to your elderly parents in need via Transferwise, or a student who crowdfunded their college fees via JustGiving – Fintech is everywhere.
Investment in Fintech has increased over the last three years by almost 60x in China to $10.1Bn; by 4x in India to $1.1Bn; 3x in Southeast Asia to $217M; and almost 10x in Africa to $203M (Ian Dowson (“Fintech investment trends” – as presented at London Fintech Week, July 2017). According to KPMG, 18 global investment in Fintech companies hit $57.9 billion across 875 deals.
Over the past 10 years, financial institutions have faced an ever-increasing regulatory burden. This has led many corporates to invest in Regtech (the use of new technology to facilitate the delivery of regulatory requirements). Regtech has emerged in response to top-down institutional demand arising from the exponential growth of compliance costs, and as such is almost a different phenomenon to Fintech.
Furthermore, blockchain technology continues to attract interest, as do Insurtech companies (technology innovations designed to squeeze out savings and efficiency from the current insurance industry model). There is also the possibility to create a so-called “smart contract” using blockchain technology (a contract that has the ability to be self-executing and self-maintaining).
Additionally, the emergence of data analytics in the investment space has enabled firms to hone in on investors and deliver tailored products and automated investing.
Like with some other sectors (e.g. Healthtech and Edtech), Fintech is pursuing customer centricity and user experience personalization as new generations increasingly expect speed, convenience, and high-quality service designed specifically for them. Banks, for example, are looking into ways to organize around their customers by using social media, integrating their digital channels, and offering 24/7 service.
One of the main trends in the sector is the growth of new technology-driven payments processes that facilitate easier payments, as well as the increased use of electronic devices to transfer money between accounts. Today’s digital natives and mobile-first users expect fast, convenient, and secure payment solutions.
Are you willing to enrich your network with valuable connections, share your experience and expertise, learn, and meet change-makers from Fintech and other key industries, from all over the world? Don't miss your opportunity and get your Expert Pass to the Seedstars Summit happening on the 5th of April in Lausanne, Switzerland!
New funding options have also emerged — such as P2P lending and marketplace lending platforms.
Fintech also plays a large role in institutions’ internal operations, as evidenced by the high levels of spending that large financial institutions invest in enhancing their IT capabilities.
The proliferation of Fintech in emerging economies is supported by high penetration of mobile devices with Internet access, a rising middle class, untapped market opportunities, a lack of physical infrastructure, and weaker data protection requirements.
Digital finance alone could benefit emerging economies by stimulating inclusive growth that would inject an additional $3.7 trillion into their GDP in a decade, according to a recent report by the McKinsey Global Institute. The results of a long-term impact study of a mobile money service in Kenya, M-PESA, concluded that mobile money had enabled 194,000 households (or 2% of the Kenyan population) to out of poverty, and had effectively improved the economic situation of poor women and female-headed households.
Fintech can also improve the overall welfare of the population – for instance, a recent MIT study showed that access to mobile money has reduced extreme poverty by 9.2 percent, and increased daily per capita consumption by an average of 18.5 percent among female-headed households.
Financial inclusion is one of the key elements in achieving many of the SDGs and can support overall economic growth.
When people think of SDGs (Sustainable Development Goals), they don’t usually think of financial services. However, decent work and economic growth — coupled with building resilient infrastructure, promoting inclusive and sustainable industrialization, and fostering innovation (as outlined in SDG8 and SDG9) — are key to sustainable development of the planet.
While Fintech has positively impacted the lives of people in emerging markets, more than two billion adults remain excluded from the formal financial system — and more than half of them are women. Fintech companies will need to find ways to serve the world’s unbanked.
These populations are often ones that are already marginalized, including women, low-income, and hard-to-reach individuals. Being left out of the formal economy means these populations are denied processes such as the extension of savings, credit, insurance, and payment services.
Cybersecurity is another major concern for Fintech. Given the sensitive nature of the client data they hold, fending off cyber-attacks in one of the greatest challenges Fintech companies face.
With initial capabilities in place, it’s only a matter of time before Fintech make an even more significant impact in the financial services industry. There is no doubt that the financial services industry has become increasingly dynamic. Traditional finance institutions and new players will need to work together to evolve and meet evolving customer expectations.
ASIA • ENERGY & NATURAL RESOURCES
Can Green Startups in Asia Help Mitigate Climate Change?
The Metronome, the famous Manhattan digital clock in Union Square, started the countdown to the next climate disaster.
AFRICA • ECOSYSTEM ENABLER
Designing Virtual Learning Opportunities for Entrepreneurs in Africa [Q&A]
If we say that COVID-19 has changed the world, it would be an understatement. COVID-19 disrupted our world.
AFRICA • EDUCATION & CONSULTING
Can Vocational Training Help the African Economy Soar to New Heights?
When the time comes to make career choices, modern young people suddenly find themselves in a seismically active world, where rock-solid paradigms are cracking, new normals are forming, and opportunities are flowing like lava.
GLOBAL • INVESTMENT
5 Simple Mistakes Start-ups Can Avoid When Measuring KPIs
Despite some fantastic ideas, brilliant products and passionate owners, it’s a sad fact that most start-ups never make it to their third year.
GLOBAL • ECOSYSTEM ENABLER
New Seedstars Index: Efficient Tool for Data-Driven Decision Making
The Seedstars Index (SSI) has been fully reworked for the 2020 edition with the aim of achieving a higher quality predictive indicator for the success of an entrepreneurial ecosystem. Why SSI is a powerful tool for data-driven decision making:
AFRICA • OTHER
Bridging the Gap: How to Prepare Younger Generations to the Future of Work
Access without quality undermines investments in the sector and yields limited gains. Ivory Coast, and the continent more broadly, has witnessed an increase of the school attendance rates
CENTRAL AND EASTERN EUROPE • URBAN DEVELOPMENT
How Switzerland Won Its Title of the Country of Innovation
What makes Switzerland unique? How did the country manage to become the global leader in innovation?
GLOBAL • HR
Being a Better Leader: 5 Skills Founders Have to Learn to Survive Their First Year
It's not all doom and gloom. Founders have to realize that setting up a business is hard, but also that most challenges can be surpassed if tackled with the right mindset and skills.
GLOBAL • URBAN DEVELOPMENT
Civic Tech: Building More Transparent Societies in Developing Countries
Our society is at a tipping point. Consequently, there is an urgent need for developing sustainable economic and social solutions for change. This is where transparency comes in.
AFRICA • FINANCIAL SERVICES
Future bright as african tech startup funding grows
Africa has long lagged behind the rest of the world when it comes to investment, even in the continent’s most exciting tech areas.
AFRICA • AGRICULTURE
Agritech in Africa: Paving The Way For a New Era in Farming
Imagine a drone flying 100 metres over a section of Nigerian farmland, taking infrared pictures that will then tell the farmer if his crops are suffering from a disease – up to 10 days before the damage is visible to the naked eye.
MIDDLE EAST AND NORTH AFRICA • TECHNOLOGY
Overview of the Entrepreneurial Landscape in MENA by Omar Christidis, CEO of Arabnet [Interview]
Recently, we had a chance to talk to Omar Christidis, CEO of Arabnet
ASIA • ENERGY & NATURAL RESOURCES
Fighting Trash: How Myanmar Is Tackling the Waste Problem in the Country?
At the forefront of the Myanmar waste discussion, the historic nation grapples with managing unwanted products like plastic and food
GLOBAL • TECHNOLOGY
Migrant Workers: Four Ideas On How Technology Can Support Skills Mobility
In this article, we will focus on the question of mobility skills, because building the right framework and policies to enable the movement of people is primordial for a sustainable economy and social wellbeing of the world’s population.
AFRICA • TECHNOLOGY
Key Ways to Shape Africa's Tech Startup Sector: Media Perspective
Heyl has also taken an undisclosed share in the company, which was founded in 2010 by the late media entrepreneur Matthew Buckland, who passed away in April.
AFRICA • GOVERNMENT
Delivering Public Services Through Technology and Entrepreneurship
The delivery of public services such as healthcare, education, sanitation and criminal justice, is a key task for any government.
GLOBAL • PROFESSIONAL SERVICES
What Is a Password Manager, and Why Does Your Startup Need One
When you’re running a startup, it goes without saying that you’ve got a lot on your plate: managing your team, updating all your social media channels, responding to user feedback. The list goes on.
GLOBAL • HEALTHCARE
Digital Health: A Solution to Growing Problems in Healthcare
The Healthtech industry spans a broad number of sub-sectors: hospitals and practitioners; insurance companies; consumer-facing services; pharmaceuticals; and government – to name a few.
LATIN AMERICA • INVESTMENT
Chile — the Leading LATAM Startup Ecosystem
Known for its numerous breathtaking landscapes, wineries, and abundance of copper, Chile is a country that has so much more to offer.
GLOBAL • TECHNOLOGY
Proven Methodologies for Delivering an Interactive Workshop in the Tech Industry
Hosting a workshop at a conference or an event can be strenuous
GLOBAL • ENTERPRISE
How To Make The Most Out Of A Networking Event
Although some entrepreneurs out there attribute their success to luck, savvy startups know that real business opportunity is created through hard work and consistently showing up in the right place at the right time.
CENTRAL AND EASTERN EUROPE • FINANCIAL SERVICES
The FinTech Stars Journey: An Insight on the Three-Month Acceleration Program
Have you ever been to Astana? You would be surprised. Sky-high glass buildings, newly built smart quarters with entrances by a fingerprint scan, huge Expo area - firstly, a venue for the biggest Exposition “Future of Energy”
GLOBAL • MOBILITY
Mega Cities in emerging markets: what are the perspectives on Smart Mobility?
By 2030, almost 60% of the world’s population will live in urban areas. The rapid growth of cities in the developing world, coupled with increasing urban migration, has led to a boom in mega-cities.