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Financial technology – fintech – is an exciting, emerging industry which has been disrupting the traditional financial services approaches since the early 2010s. The rise of smartphones has been a prominent driver behind this innovation – facilitating solutions in cryptocurrency, investing and borrowing. The common aim behind these solutions is the goal to “democratise financial services” to the wider public where, previously, they were only available to a select few (i.e. the very wealthy). Here at Bure Valley Group, our exclusive network offers investors access to many companies involved in these kinds of innovations.
Below, we reveal some exciting trends and insights for the fintech industry in 2021. We hope you find this content useful, but please note that it is not financial advice.To find out more about our EIS and other investment opportunities, visit our portfolio page here. To enquire regarding our latest projects and funding, you can reach us via:
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Money management has long been a time-consuming process for households. Working through bills, debts and other ongoing costs can be difficult to keep on top of – especially in today’s busy world of ever-increasing pace and information. This opens a wide space for fintech companies to offer bank apps and online payment processing solutions to burnt-out customers. Investors are often also attracted to low-cost, AI-driven fund management platforms which take away the legwork involved with personal management. Here, an analogy can be drawn with self-driving cars. Many people enjoy driving themselves, yet plenty of people would prefer the safety and convenience of a trusted computer system that does it all for them.
A worryingly low number of people in the UK describe themselves as “financially illiterate” – not understanding key concepts such as credit, investment returns, pensions and personal finance. Fintech companies are spotting opportunities with audiences who acknowledge that they are “bad with money” and need financial literacy to help them solve their own problems. Companies such as Zogo Finance and Penny have emerged to address this – building profitable business models which can generate promising investment returns.
For hundreds of years, traditional banks with physical office locations have kept clients’ money – traditionally locked up in vaults. With the rise of digitally-based finance and cryptocurrencies, however, “open banking” is gaining in popularity. New legislation such as the PSD2 (Second Payment Services Directive) in Europe since 2016 has compelled old banks to release financial information in a standardised, understandable and secure format – allowing ordinary people to engage in more investment activity. Through the use of APIs, open banking apps can access this open-source information and package it in a way that is useful to customers who are looking for easy access to their money, and the data lying behind it. Examples include Plaid, Tink and Nordic API Gateway.
Biometric security systems
Financial security has been an issue for as long as money and assets have existed. A physical bank can be robbed, and money under your mattress burned down with your house. With the rise of digital technologies, however, new tools are at our disposal to protect our money and savings. A great fintech example is biometrics – involving the likes of faceprint and fingerprint recognition to help thwart cybercrime. This has been widely rolled-out across mobile banking apps (including long standing brands). With the rise of hygiene concerns in the wake of covid, however, biometrics face challenges about how to progress in a public setting – such as using fingerprint technologies in bank branches. Innovations in contactless payment methods also could affect the relevance and usability of these technologies going into the 2020s.
Wouldn’t it be useful to simply “tell” your mobile banking app where you’d like to make a transfer or payment? With new voice technology innovations this is becoming a reality. It also helps to address some of the health concerns involved with facial and fingerprint biometrics. Automated voice agents are now more widespread, allowing banks and digital investment platforms to report balances and reply to customer queries without requiring the employment of human staff (along with the high overheads involved). Voice is becoming much more widely accepted by the general public, up from 8% use in 2017 to a projected 31% usage rate by 2022.
Conclusion & invitation
Fintech is now recognised and increasingly used by consumers across the globe – with money transfer and payments the most popular services (used by 75% of consumers in 2021). There is plenty of scope for growth, however. Investment and saving service adoption, for instance, is still only 27% amongst the female population compared to 40% for men. At present, 29% are not aware budgeting and financial planning services (e.g. “robo advisers”) which could benefit them. Naturally, for the general population cost of these solutions remains the primary concern for companies to address – with security and privacy also high up on the list.
Interested in finding out more about the exciting startup projects we have on offer to investors here at Bure Valley Group? Get in touch today to start a conversation with our team and discuss some of the great investment memorandums we have available here:
+44 160 334 0827