Financial technology is growing rapidly and new startups are continuing to emerge and receive capital funding. The sector is poised to experience a boom in 2015 as investors look to improve operational efficiency and transparency with new technology.
“Deal volumes in the fintech industry have grown 27 percent each year since 2008.”
Boom time for the financial technology industry
According to techworld, deal volumes in the financial technology (fintech) industry have grown 27 percent each year since 2008 globally and 13 percent in Silicon Valley. This year is likely to witness a new wave of fintech innovations as well. The trend is expected to be accelerated by favorable developments in the regulatory environment that will encourage better access to information throughout the world of finance.
Forex Magnates reported that in 2014, fintech was the recipient of hundreds of millions of dollars in venture capital. The sector also saw emerging technology satisfy public demand for financial transparency. RobinHood, a mobile based commission-free trading brokerage service, was mentioned as an example of the type of product that is representative of the trend. The trading program makes investing more affordable for retail investors because the company generates revenue on margins rather than through commissions.
The news source also mentioned robo investing as a mark of the fintech revolution. Robo investing is a tool developed around the idea that managed investments can underperform over the long term due to fees. As a result, low-cost portfolios that simply invest in indexes can offer investors a way to circumvent these losses. Last year was a big year for robo investors with leading companies Nutmeg, Betterment and Wealthfront amassing approximately $3 billion in assets under management. Platforms such as these automatically invest funds in ETFs that track indexes. As a result, users are only required to enter information such as age, risk tolerance and years until retirement. They are not required to spend time reading prospectuses and looking up financial definitions.
The financial technology industry is expected to have a very good year.
The biggest fintech players cater to the financial services sector
Money Marketing reported that the fintech market in the United Kingdom alone generates approximately £20 billion in annual revenues. The majority of this is produced by traditional fintech players that sell technology products to the financial services sector. Such products include trading platforms, personal wealth platforms, aggregator research services and analytical software. It was noted that as the fintech industry grows and becomes further integrated with finance, consolidation may begin to occur. Large commercial banks and top-tier investment banks may soon begin acquiring financial technology companies in order to leverage their solutions and offer improved account services to clients.
Increasingly, companies rely on financial technology to improve data transparency, improve operational efficiency and lower costs. The IFINTEC Finance Technologies Conference and Exhibition will be held between April 14 – 16 this year in in Istanbul, Turkey. The conference will focus on technology solutions for the finance industry, with emphasis on data systems, trading platforms and banking service solutions. Over 1,000 big names are expected to attend and it is certain that some fintech companies will show the world how innovative their respective solutions really are.
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