Microsoft have been actively encouraging fintech start-ups in Brazil since 2014 when they established a start-up fund in collaboration with Brazil’s Banco Votorantim: BR Startups. Their first formal venture was announced in July this year as collaboration with Monsanto in the agribusiness sector.
Dramatic effects
It is through more mainstream areas of the financial services sector that the impact of Fintech is being felt most. Perhaps the best-known development to date, Funding Circle, is steadily undermining established capital-raising mechanisms for small businesses. With over $2 billion already lent to 20,000 different business across the US and Europe, Funding Circle is on track to fulfill its mission to revolutionize the banking system. Who needs VCs? In China, where financial services are rapidly expanding to match the developing economic picture, automated insurance underwriting is now provided by ZhongAn. ZhongAn is a company started in 2013 which already holds an auto insurance license from the Insurance Regulatory Commission. This is a business that is already proving the commercial viability of its offering. Who needs underwriters? In the US, Wealthfront has been developed to deliver fully automated investment service. The collation and delivery of multiple data charts has been a feature of the financial trading landscape for two decades, but the move from simple data delivery to investment management represents a giant leap forwards – not least for individual investors. Who needs financial advisers? And in the UK and India, the relatively new start-up TransferGo has been enabling its 200,000 strong users to send money back home for the fixed cost of 99 pence – 10 times cheaper than traditional bank transfer fees.
Just the start
For those involved in the FinTech sector, this is merely the beginning. As Microsoft’s investment suggests, there are huge revenues to be enjoyed from those able to develop and market products that marry a market need with streamlined and secure automated functions. To date it has been Chinese developers who have been leading the charge. A massive influx of new technology-literate and financially ambitious ‘users’ in a new marketplace that shows mushrooming growth has made for a perfect developmental and entrepreneurial storm.
A global surge
China may be leading the charge, but, as the Microsoft investment suggests, there is no shortage of effort to catch the fintech wave in the West. The offer of a fintech course at MIT as a means to ‘future-proof’ a business (or a career) is a practical illustration of attempts elsewhere to match the pace and reach of Chinese development. To date the field has been marked by the entry of smaller, more agile start-ups aiming to subvert and out-compete the more lumbering – and inevitably conservative – efforts of the established financial order – banks, trading houses and so on. But as the industry wakes up to the inevitability of FinTech, it seems inevitable that much of that investment will be carried out by those who have not only most to gain from the uptake of new technologies, but also most to lose. They will be motivated by one simple question: in a world where FinTech delivers optimal, tailored and wholly secure investment outcomes, who needs finance professionals?
