The Fintech revolution is happening right now, led by London as one of the most innovative cities, and it is important for small businesses to capitalise on this.
The Fintech sector is being driven by new technology, cost reductions and changing consumer behaviour, and small business customers now have a choice of which financial services institutions they have a banking relationship with.
The last few years have been nothing short of revolutionary for the finance industry. Digitally focused finance company start-ups are popping up left, right and centre, attracting millions in investment and posing a real threat to traditional services.
They have swooped in and filled the gaps that the banking sector has not been able to – from startups like challenger bank Tide to peer-to-peer money transfer service TransferWise, and MarketInvoice, which allows businesses to sell unpaid invoices to provide working capital.
The Fintech Revolution is happening right now and the banking sector is sitting up and listening. London is still leading this innovation – in fact, recent research has revealed that London’s Fintech sector is growing more than three times faster than that of Berlin, despite the decision to leave the European Union.
And amid this fintech explosion, small businesses are the biggest opportunity on the web right now. There are over 5.4 million small businesses in the UK alone, making up over 99% of businesses and employing 60% of all private-sector employment in the UK according to the FSB.
They are often as nimble as the fintech startups aiming to serve them, demanding different things from the services they use and forcing change, which has given way to the emergence of something we are referring to as the ‘financial web’.
The financial web is an ecosystem that has been created by ‘financial platform’ products such as cloud accounting software company Xero, which enable add-on products to connect to it through an open application programme interface (API)
Simply put, the financial web is an ecosystem that has been created by ‘financial platform’ products such as cloud accounting software company Xero, which enable add-on products to connect to it through an open application programme interface (API).
In turn, those add-on product companies may also connect to each other creating a web of interconnected platforms. Within the Financial Web, direct bank feeds are incorporated from traditional banks, payments are automated and it’s made easier for banks and business finance providers to lend.
But why is this so revolutionary for small business? Well, it is fundamentally changing the way that financial service providers interact with small businesses. The aim is to give small businesses a choice of financial services and products that help them to run and grow their business.
Ultimately, they should have easy access to capital, so the financial web removes the day-to-day problems that take small businesses away from what they’re passionate about – running their business.
The sector is being driven by new technology, cost reductions and changing consumer behaviour, and small business customers now have a choice of which financial services institutions they have a banking relationship with. The financial web is the peer-to-peer, collaborative and route – which brings with it cost and time savings for business owners and lightning-quick developments in tech.