How FinTech opportunities are revolutionising our SMEs
Future of Fintech For the majority of SMEs and growing businesses looking to scale up, two insecurities tend to hold back fintech investment: firstly a lack of financial assets, and secondly an uncertainty over their long-term position in a competitive market.
For these companies, buying into ‘disruptive’ technologies at a time when they are seeking financial stability and marketplace security often translates into risk – despite the potential of these technologies to revolutionise how they operate.
But for those willing to invest in fintech – especially in data, payments and software technologies - a more efficient and cost-effective business model coupled with competitive advantage will be the result. Put simply, we must demonstrate to the SME community that these technologies will aid growth and development, not hinder or threaten it.
At the heart of the fintech revolution is big data – the harvesting of insights from vast quantities of data that is redefining almost every industry and sector in our economy.
Take the arts, for example. By analysing thousands of audiences and the shows they attend, big data is helping theatres better understand their customers and target them more effectively – the biggest overhaul of how the sector operates in decades. In medicine, the analysis of thousands of patients’ records is driving forward better treatment and care, including currently incurable conditions. And in insurance big data analysis is helping insurers more effectively underwrite policies.
As our digitalised economy becomes increasingly underpinned by information and data, the role of data analytics is only set to grow; it is imperative therefore that SMEs embrace these big data opportunities - or else face being left behind, both at home and abroad.
Whilst big data is shaking up how firms understand their customers or undertake their research, peer-to-peer lending has impacted the SME funding market with similar verve.
In the wake of the banking crisis and Great Recession, access to finance has become by far one of the greatest hurdles to SME growth. This is why Tech London Advocates, as the capital’s 900-strong tech advocacy group championing private sector tech investment, is encouraging greater private sector funding of our burgeoning tech SMEs and growth businesses.
The UK is the fastest growing region for fintech in the world, with fintech bringing in £20b to the economy each year.
In this environment P2P lending has become especially pertinent, providing the vital capital and lower lending rates that many SMEs require to scale up. P2P fintech has also unlocked new opportunities for growth businesses with international ambitions, thanks to international transaction handlers such as TransferWise who have dramatically reduced international transfer fees. As a result more firms can fulfil opportunities to expand abroad, with greater financial efficiency.
But whilst this year the UK’s peer-to-peer lending market is set to top £1b, more can be done. We must continue to ensure that private sector crowd funders such as Zopa and Funding Circle are not just seen as quirky ‘alternative’ lending mechanisms where all else fails, but genuine alternatives to the banks.
The funding problem is exacerbated by immigration legislation, which continues to keep vital developers and experts out of the country. Take SwiftKey, a rising software company that is revolutionizing predictive typing, where its employees speak tens of languages. The most successful technology companies are global in ambition, scale and personnel. London is renowned for being a global city, but complex laws and expensive processes are forcing the best experts to consider working elsewhere. London must become a shining example of professional diversity, a United Nations of technology.
For years, the problem for startups has been obtaining funding, and that is still at times challenging. But where confidence grows, money is sure to follow. Right now, London technology is flush with confidence. But it is built on potential and we need to make changes to education and immigration to ensure London possesses the talent required to deliver on its promise.
The UK is the fastest growing region for fintech in the world, with fintech bringing in £20b to the economy each year. As the sector continues to grow from strength to strength, now is the time for SMEs and growing businesses to abandon any lingering doubts and embrace the fintech revolution.