Have we reached “peak fintech”?

Business and banking are being presented with opportunities to benefit from digital insights like never before.

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Fintech has become so ubiquitous you can’t go outside without seeing an advert for a new payments card or a new app for money transfers, pensions or investments. Not only that, the United Kingdom has over 1,600 fintech firms – a number which is forecast to more than double in the next decade – that employ over 75,000 people and have raised more than £12 billion over the last five years.

For all the growth, however, the industry’s reach is as broad as it is shallow. The bulk of entrepreneurs and startups that emerged in the post-financial crisis fintech wave have gone after the low-hanging fruit of designing apps and offering pre-paid cards to individuals. Now, with that market becoming increasingly saturated and competition for customers intensifying, much bigger opportunities await those willing to design solutions for the complex, multi-faceted arena of international business.

The fintech revolution is now moving to a new phase that will be all about corporate customers – call it fintech 2.0. To succeed, fintechs will have to become experts at harnessing the mountains of data at their fingertips and building strategic partnerships with other platforms, as well as financial institutions such as banks, rather than planning for their demise.

According to McKinsey's report, Synergy and disruption: ten trends shaping fintech, published in December 2018, 80 per cent of financial institutions have entered fintech partnerships. Meanwhile, 82 per cent expect to increase fintech partnerships in the next three to five years, according to a Department for International Trade report entitled UK FinTech State of the Nation.

Still, while the opportunity is great, the work needed to capitalise on it is near endless. The Open Banking initiative, for example, offers large untapped potential for business customers. Designed to unlock rich financial data, it will help transform the way that data is managed, shared and used. Open Banking will help not only individuals but also companies become more intelligent with their own data to deliver efficiencies and unlock new insights for future business.

A key ingredient in informed decision-making is having access to data in real time, something which is especially relevant in Centtrip’s areas of expertise: treasury and payments. Up-to-the-second data can allow our corporate customers to have a clear view of their cash positions, liquidity and foreign exchange requirements based on spend patterns and seasonality at a granular, per payment, level, and can also help them predict how those may change over time given different variables.

Corporate treasury has traditionally been both risk-averse and under-invested, seen by many businesses as a cost, rather than a potential profit, centre. Yet with the growing burden of regulatory compliance, increasing complexity of treasury operations and an increased focus on liquidity management, corporate treasury teams are finding themselves in catch-up mode.

They’re beginning to wonder if the benefits available through consumer-facing fintech should be accessible to them too. Other technologies that will likely be part of the corporate fintech movement will be regtech, blockchain and distributed ledgers, and RPA (robotic process automation), since all promise enormous benefits.

To conclude, anyone suggesting we’ve reached “peak fintech” has misunderstood how great the opportunities are in the corporate sector. Perhaps the consumer-focused market is approaching saturation, but the scope for business applications is immeasurably larger and more exciting.

Jane Turner is chief strategy and marketing officer at Centtrip, a fintech company specialising on real-time treasury management solutions.