2017 has been a record year for investment in fintech businesses in the UK, with over £825 million pumped in by investors since the start of the year according to research commissioned by the London Mayor’s office.
Fintech as a term covers a broad spectrum from platforms and infrastructure to practical payment apps and even digital currencies like bitcoin. The reality is that businesses and, increasingly, individuals are making use of new technologies to either handle financial transactions or analyse and manage financial affairs.
The conversation is moving on quickly from the cloud to one around devices, apps, new banks, and web based applications that sit across or feed into the data that is being created - and again not just for businesses but for consumers too.
With such a huge investment pool, we are already seeing recently established businesses making progress in the UK market. Given the open banking initiatives coming from 2018 we can expect a further explosion of new products and services to follow.
What’s interesting about many of these new fintech companies is that they are increasingly following a clear pattern:
- Building a strong direct to consumer/business sales channel
- Having products which require very little commitment from users
- Focus on user experience and ease of use
- Simple messaging
- Very feature driven
Where does this leave accountants?
It’s clear that accountants provide an important channel to market, and we can see by the number of new businesses exhibiting at the trade shows and major vendor events this year that there is no little interest in the support that firms can give to shift product. But increasingly there is recognition that accountants need to be able to buy in to what they are doing, not least to ensure that they don’t actually become a blocker to adoption.
At the recent Sage Session event in Birmingham, one attendee made it quite clear to me that she was being used by clients as a sounding board for new tech, and was quite happy to dissuade if she thought it wasn’t up to scratch.
The other important role for accountants in the new fintech explosion is in product feedback- having great tech and user experience is one thing, but making sure it actually performs the function it was designed for is another. The playbook to get out an MVP (minimum viable product) out the door as soon as possible is often linked to the funding conditions that many fintech’s are bound to, where adoption figures can be given a bigger weight than revenue in the early stages. The cycle of developing the product to hone into market need then starts to accelerate, and is often where accountants come into play.
Alex Falcon Huerta, of Soaring Falcon Accounting is a good example of this: “New software vendors don’t necessarily fully understand the accounting side, so I work with them to translate what they do into what we need so we can get what we want from it. They have the great idea, but won’t get anywhere unless it fits into how firms work and gets the job done how we need it”.
The rate of new product and services coming into the market is already on the up, and is likely to ramp up as the cash filters through. Staying on top of what is going on is not going to be easy, but it will be important to have a view - not least because the direct to consumer/business push and low barriers to adoption is already seeing clients arriving with all kinds of technology. As most will link at some point with bookkeeping applications there will be pressure to know just how it all fits together and maybe even an expectation of providing effective first line support.
Support from new vendors
At the very least, a practical understanding of how to solve client problems with the technologies available will continue (as it does now), but the field and range is going to be more intense.
Getting the right level and type of support from these new vendors is also going to be critical, and few busy accountants will tolerate poor customer service, important absent features, and overly complex products. Whether they get this right will be just as important as their promised value to end users.
Rationalising the amount of technologies a firm has to engage with might be like trying to hold back the sea, but in my view only those that form a deep understanding of the profession and the challenges clients have that accountants build their services around will actually last the course.
Saying that the sense of energy and optimism can’t be ignored. And where the cloud guys have made the running, the new breed of fintech companies are ready to sweep in and take things to a whole new level, but they’ll need your help.