The fintech industry is booming. Browse through the business pages in any national daily and you’ll likely hear about a fintech startup challenging convention or setting the pace with funding and investment.
Recent figures only serve to prove the rapid growth of the sector with deal volumes growing at a yearly rate of 74% since 2008. Start-ups are at the forefront, raising over $700m from investors during the same period (Accenture).
The banking industry is also experiencing a dramatic change with a recent announcement from the Competition and Markets Authority (CMA) stating that the ‘Big Four’ high street banks are to face a competition inquiry amid concerns that they offer little choice
for small business borrowers – this could result in a potential break-up of the ‘Big-Four’.
There have never been as many options available to SMEs, thanks to innovations in payments, asset management and crowdfunding. International payments in particular have seen big developments, now catering to a market of SMEs challenged by high fees imposed
by banks. SMEs also have access to fintech platforms providing knowledge and support to navigate the forex market.
There are however some signs that the banking industry is catching on to these technological changes. Barclays recently announced a call for startups for its fintech accelerator programme, aimed at harnessing the innovations they produce in an attempt to
adapt to the changing financial environment. In addition, Lloyds has instead backed a ‘startup bootcamp’ scheme aimed at supporting the work of certain fintech businesses, allowing members to benefit from its software, networks, and a large cash injection.
Fintech clearly has the potential to revolutionise the industry. While banks are slowly coming around to technology to facilitate traditional banking and trading methods, the changing needs of SME borrowers are increasing at a rapid pace.
SMEs are now in an excellent position to take advantage of the huge range of technology platforms available to meet their demands and, if the high street banks don’t take this into account, they may find their role becoming increasingly marginalised.