Why is developing technology in fintech so important?

2221

Of all the industries currently being transformed by the world’s revolution in technology, financial markets are undergoing some of the most dramatic changes – and some that are most likely to uproot the industry as it currently stands.

For centuries, finance has been dominated by bigger players with massive amounts of power. Not anymore.

The distribution of money through tech – a move first given traction by the adoption of online banking and companies like PayPal – is now moving to replicate services once owned by bigger banks and financial giants.

The clear opportunity in this space has been noted. Goldman Sachs reports there is an opportunity for startups to gain $470 billion in profit from established financial services companies.

In Australia, the market to offer SMEs financing has been well documented. According to Frost & Sullivan, fintech offering SME finance will add $1 billion to the economy by 2020.

It’s clear that fintech is offering services that small businesses and individuals want to see delivered by startups, rather than solely through larger institutions.

There are several reasons for this. The first is that fintech is allowing businesses to gain access to finance at a faster rate than ever before, and with fewer hurdles, regardless of the size of their business.

Another key reason is that algorithm development and more accurate data analysis is allowing a much more detailed risk-analysis model to foster. Those who might not have been able to access finance before can do so.

But the industry faces some barriers. Finance is a space owned by several major players, and collaboration between large organisations and startups is key for the industry’s success.

This need for collaboration and co-creation is partly why companies like Visa have started working with fintech and connecting startups with traditional financial services organisations.

This month, Visa has launched The Everywhere Initiative in Australia and New Zealand, which is challenging startups to solve problems by integrating Visa APIs into their own products – the idea being that new ideas for payments will benefit the entire industry and deliver new options for consumers.

The initiative launched in the US last year and its first batch of winners included Reelio, a platform that connects video influencers with brands to work together on content strategies.

But the win wasn’t just a benefit for Reelio – it helped Visa understand how startups can play a part in leveraging the Visa platform for new ventures. Reelio has gone on to partner with YouTube and has opened offices in New York and Los Angeles.

“Winning The Everywhere Initiative has been a huge asset for us,” says CEO and founder, Pete Borum.

“The win has provided tangible proof of the value that Reelio is bringing to the market, immediately qualifying us to prospective customers, investors and partners. We are entering into our third campaign with Visa in a year and look forward to working with them for years to come.”

Adam Neff, the CEO and co-founder of mobile lending platform Ledge who won earlier this year, says the Initiative provided the company with access to be “everywhere we want to be”.

That growth, Neff argues, is crucial in order to scale the business to take advantage of the gap in the market waiting for startups to offer viable alternatives to existing financial structures.

“This partnership gives us immediate access to millions of consumers who already know and trust the Visa brand.”

Entries to The Everywhere Initiative are open until August 26th. Register your interest in The Everywhere Initiative and submit your challenge response today.

VISA
Visa Inc. is a global payments technology company that connects consumers, businesses, financial institutions, and governments in more than 200 countries and territories to fast, secure and reliable electronic payments. Visit www.visa.com.au and @VisaNewsAU.