Significant milestones in the financial technology industry have been reached recently, marking a new era in financial growth and technological expansion: "FinTech" has officially come of age.
This also marks a shift in the financial habits of the average startup or SME owner across the board, and the world. Technology has opened up innovative and cost effective ways of managing business, and startups are embracing the range of FinTech tools available. The cloud has become more vital to SMEs, having thrown the doors wide open to new ways of financial management and access to funding options.
In the UK Business to Business sector, the latest findings show that increasing numbers of small- and medium-sized businesses are taking their financial management and investments online. Researching the data indicates that there are significant increases and steady growth in subscriptions to cloud-based accounting products, startup finance and digital procurement tools.
The UK has become a hub for innovative FinTech startups in recent years, as highlighted in the recently presented report by Ernst&Young. In 2014, the company were commissioned by Harriet Baldwin, the then Economic Secretary to the Treasury, to research bench-marking in the UK and compare it to other selected international FinTech ecosystems.
The findings were that the UK is a global capital for "FinTech"- the report estimating that in the UK FinTech sector had generated £6,6bn in revenue in 2015 – and it had also attracted £524 million in investment. It also employs 61,000-plus people.
The main reason behind this is that the UK’s world-leading FinTech policy has been forward thinking and most beneficial to the sector – it includes supportive regulatory initiatives, tax incentives and government programmes. The report interestingly goes on to say that the UK was second in the world to the US in terms of its availability of technology, financial services and entrepreneurial spirit – and first when it came to access to financial expertise.
Here are some examples of real milestones reached in the last few months in the UK B2B FinTech industry:
Five years after being founded TradeRiver, a leading online lending platform announced that it had reached a significant milestone – it had now lent over £100 million to high growth SME businesses in the UK.
TradeRiver Finance's CEO Richard Fosset plus.google.com
In five years, TradeRiver has funded over 1,600 transactions - and many of these were purchases from suppliers overseas. TradeRiver has also funded goods or services in 26 countries around the world.
Another impressive UK-grown small business loan player is Funding Circle, which as facilitated more that £1,25bn of loans to 16,000 UK based businesses since it started in 2010. The company has diversified significantly – now lending to institutions, national governments and international bodies – and of course individuals. A report by the Centre for Economics and Business Research, found that 72% of small businesses found Funding Circle’s process faster than competitors. Since conception, Funding Circle had helped start up 15,000 new businesses, and this mean about 40,000 jobs have been created.
Globally the service sector of financial technology is booming:
QuickBooks have now got 1.5 million subscribers linked into QuickBooks Online, according to Intuit. Small Businesses that are new to the Intuit franchise make up than 80 percent of QuickBooks Online customers. This, said Executive Vice President of Intuit’s Small Business Group Sasan Goodarzi, reflects the company’s commitment to small businesses, and pointed to analysis that predicts that 78 percent of small businesses across the globe will be part of the cloud by 2020.The company has been providing it's innovative service for just over twenty years.
Here are a few financial technology tools that are enjoying their well-deserved popularity:
Xero, main competitor to QuickBooks, is hugely popular and for good reason, it having a simpler, easier approach to small business accounting. Started ten years ago in Wellington New Zealand, it has grown to a massive 700,000 subscribers and employs 1400 people
Freshbooks, which was started in Toronto in 2003, claims that it has been used by 10 million people who have processed billions of dollars through it's simple and easy-to-use business management tools.
More traditional but the market leader, Sage, formerly Sage Group plc is the largest supplier to small businesses, and has 6.1 million customers worldwide. It currently has offices in 24 countries. Sage has 6.1 million customers and 13,400 employees across the world. They have increased their products to include integration with payroll and pensions auto-enrolment. The new challenges faced by SMEs are particular to regulation and compliance, and the company has been working to incorporate multiple requirements across the various spheres of business regulation.
All proof that the digital age is upon us and there are no limits to technological innovation. This is a brave new world to be a part of indeed, and a daunting one if you are a business owner looking out over the myriad of financial management tools and startup funding options available. SMEs have never been so close to solutions for their every need.
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