Future of Fintech

27 March 2017

Amy French

The Link asked Amy French, Ecosystem Development Manager at the tech accelerator Level 39, what to expect from the fintech industries in the coming years.

The rocketing growth of the fintech sector has put the whole financial industry in a delicate position as startups expand to become global players eating away at market shares that for a long time have been more or less reserved for traditional banks and the like. Some bold voices suggest that this will be the end of the banking sector as we know it, while others, including French, believe that the only way forward is collaboration between the two.

“As competition tightens for both fintech and financial services, organisations must offer value to the end user and we’ve seen a move towards more collaboration between fintechs and incumbents to deliver this,” French tells The LINK.

However, French is convinced that the financial services landscape is likely to be pretty different in the years to come. She believes that the industry incumbents must act decisively to ensure they play a valuable part in the industry going forward by actively investing in and partner with young businesses to ensure that the role of the bank remains theirs.

“Right now, there is an urgent requirement for action from incumbents in the industry. Major financial services organisations need to increase their engagement and collaboration with fintechs, take risks and become customers and partners of these businesses to deliver services tailored to the changing requirements of consumers”.

The very core of the financial industry is trust, and in that department, the banks have an advantage in their experience.

“Traditional banks still offer in-person and over the phone customer care, which increase customers’ confidence in those who hold their money. The use of personal-finance management applications is likely to rise in the coming years, but consumers will still expect personalised service when problems arise,” French explains.

Level39 is an accelerator space for finance, cyber security, retail and smart city technology companies based in Canary Wharf. Since launching in 2013, the community has grown to 200 member companies, of which 70% fall within the fintech vertical. With that kind of selection, French has seen first-hand how the sector has grown to become more multi-faceted. One of the biggest subsectors at Level 39 is cyber security and the accelerator boasts the largest cluster of cyber security companies in London. But only in the last year, a handful of companies using blockchain technology have joined, adding increased diversity to the network together with other players.

“Another sector on the rise within our community is Financial Inclusion, with the likes of Japanese startup Doreming, which empowers unbanked workers by ensuring they can pay for basic items while enabling them to develop and track their employment history,” French says.

No matter what niche of the fintech sector a company has chosen to carve into, French denotes one thing as essential for the service to take flight - the importance of personalisation and user experience to acquire and retain happy users.

“What is noticeable across the broad spectrum of fintech verticals is that there’s a real focus on customer experience and developing products that put customers at the center of all decision making,” French explains.

As far as financial hubs go, French highlights both London and Scandinavia as important hotbeds for fintech innovation. London’s strength lies in the intense activity around fostering new startups, with accelerators, incubators and coworking spaces opening up almost every week.

“This activity provides opportunities for collaborative engagement and access to relevant expertise and networks,” French says.

This makes London a global financial centre with a world-leading startup and tech sector that has nurtured some of the world’s leading fintech startups, such as Transferwise, GoCardless and Monzo, to name a few.

In the Nordics, the introduction of smart government policies have played a crucial role in the drive towards a cashless society, according to French. In addition, the collaboration between incumbents and startups is more integrated in the Nordics than anywhere else.

“There is a bigger willingness from banks to engage with fintechs in the Nordics over that in the rest of Europe. This supports collaboration and innovation in the region,” French tells The LINK.

As an example, French mentions Swish, an app adopted by nearly half the Swedish population, that was developed jointly with the country’s major banks.The app uses phone numbers to allow anyone with a smartphone to transfer money from one bank account to another in real time. Swish is now used to make more than 9 million payments a month.

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