London Fintech Week: Three big Fintech questions answered
With London Fintech Week in full swing, Fieldfisher Fintech expert Simon Briskman, Partner, Outsourcing, Technology and Telecoms, comments on three of the main topics up for discussion.
Is London still the World’s Fintech Capital?
Silicon Valley arguably outstrips any European Fintech centre, but London is the Fintech Capital of the EU.
We still have more technology professionals in finance in London than Frankfurt has financiers.
The amount of funding in London is very healthy compared with the continent and we see regular innovation from start-ups and high growth companies in areas including trading platforms, regulatory technology (regtech), software-as-a-service (SaaS), automation and artificial intelligence (AI) solutions.
London is neither seeing, nor anticipating, any pause in this sector because of Brexit. Fintech continues to attract attention from major institutions, not just on the investment side, but for exploitation in their own businesses.
How are innovators challenging the role and structure of financial companies and wider society?
We are only at the start of the robotic process automation/AI revolution.
Institutions need to understand not just how to exploit these new technologies, but also how to control the emerging risks they entail.
The outlook for financial firms is for a new economy based around AI. Many AI projects will displace people and old roles will cease to exist.
In their place, we can hope to see new roles evolving – as, for example, we have already seen with social media managers and user experience specialists.
However, the transition will mean severe disruption to the workforce. Presently, there are no government plans – in the UK or around the world – to change the way we educate, train or redeploy people.
It is likely that companies will need to manage these changes in their own long-term interest, rather than relying on the state.
How can traditional financial services companies stay competitive?
Financial firms and their largest technology providers are seeking to play on all Fintech fronts at the moment, but there are serious questions about whether institutions are the best places to generate new ideas and push them in the right direction.
New products and services are generally coming from the SME/high-growth sector, fuelled by Fintech entrepreneurs.
What is difficult for these smaller companies is to survive the push from concept to product, then from product to sales and revenue, and then through to continued investment in their product and product diversification.
Companies need to seek funding at each stage of their growth. Often, this means encouraging a strategic stake or even a buy-out from a larger institution.
Generally, the trend among investors and business leaders has been to support major corporations to take investments in maturing Fintech companies, for these reasons.