Why fintech matters — musings of a fintech newbie

I’m Emily, a recent graduate and a fintech newbie. I joined an exciting fintech startup called Pariti a few months ago and took my first plunge into the world of fintech. Fintech is a term that’s currently very in vogue in the startup scene and investors are scrambling to find the next big name in fintech first. The sector is booming, particularly in London; in the UK $901m (£630m) was invested in the sector in 2015 alone. But why the hype? What even is fintech? And what does fintech want to change?

Through the eyes of someone who is neither hugely techy, and studied languages not numbers, this is why fintech matters to you.

So, what is fintech?

Fintech stands for financial technology and it’s new, young and exciting. Fintech is an umbrella term encompassing a huge number of areas, but consumer fintech is the area I’m most interested in. This is because it has the potential to fundamentally change the way we (normal people) deal with our finances. I’m talking the way we borrow, lend, spend and save. As with the rest of our increasingly online world, thanks to technology, things are being made easier for the people that matter — you and me, the consumers.

The banking sector is not known for its transparency or efficiency and the world of finance is a bafflingly confusing one. Knowing what the best thing to do with your money is is far from obvious and banks do little to make anything any simpler. Particularly in the wake of the 2007/8 financial crisis, consumers are demanding a fairer way to deal with their money. Cue the emergence of fintech — a sector that sees these issues and seeks to change them.

What is it going to change?

Fintech firms are taking back power from the big banks and making finance easier and fairer for the consumer. We’re seeing the emergence of fantastic low cost, high convenience alternatives to traditional bank services, such as Transferwise for money transfer, Osper for under 18s banking, and Nutmeg for investments, all of which are chipping away at the larger banks.

However, a future world where we’re using 100 different companies for 100 different services clearly isn’t the answer. In response to this inefficiency, we’re starting to see the ‘rebundling’ of the bank… where consumer focused platforms are bringing together the best in class from around the fintech world and making it much easier for consumers to build their own bank… the Bank of Me if you like.

Pariti is a good example of one of these consumer champion type businesses. It’s not a bank in itself, but it connects with all your existing bank accounts (HSBC, Barclays, whoever it may be), to make managing your money easier. Pariti shows you all of your accounts and cards in one place, identifies your regular income and bills and encourages you to set weekly spending goals to help you save money. You can easily see where your money is, where it’s going, and you’ll find out about any opportunities or upcoming challenges before they happen (like, for example, if you’re looking likely to fall short). This single customer view allows fairer, more contextual products to be delivered when required by the user. It means that more active roles can be taken in helping encourage and incentivise positive actions to improve user financial health. Pariti is a very young company, with huge ambitions, and it’s incredibly exciting for me to be part of both a sector and organisation that is evolving and innovating everyday.

So, a lot is going on in the world of finance currently, and fintech is definitely worth paying attention to. The sector is having a real impact on how people like you and me interact with ‘finance’. Bets are out on who will be the biggest winners and losers in this new evolving world (Pariti is representing the winners camp, obviously ;)), but one thing we can be sure about is that fintech is giving all of us more power over our money and changing the banking sector for the better. It’s designed for you and me — the 99% — not the 1% and that is most definitely a good thing.