How fintech has gone mainstream
Once a niche sector, fintech was everywhere in 2023.
Last year, financial technology (fintech) finally went mainstream. Here are some examples that underline my case.
Exhibit one: stockmarket indices. AI-focused equity indices had a superb 2023. Investment group WisdomTree, for instance, has an AI-focused exchange-traded fund (ETF) tracking a specialised index. In 2023 it rose by almost 50%. But the fintech news website AltFi runs a similar stockmarket index for global fintech firms. It gained nearly 60% last year.
Then there is exhibit two: AltFi runs an annual awards ceremony for the most innovative fintech companies. Can you guess which provider won the award for the best digital bank in 2023? Chase UK ( a brand also known as JPMorgan Chase) which happens to be one of the world’s largest banks and a late convert to the potential of fintech. Its digital banking app Chase has been an enormous success and is giving the likes of Revolut, Monzo, and Starling a run for their money.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Exhibit three: buy now, pay later (BNPL). Wander around the high street in my small Hampshire town and you’ll see a new sticker plastered on most cash tills proclaiming that you can space out your payments using a BNPL app. The remorseless rise of BNPL has even attracted the attention of regulators worried about the rise of short-term debt among younger customers.
If fintech is going mainstream and everyone and their aunt now has a digital banking app of some kind – not to mention the long list of digital savings platforms that have hoovered up cash deposits – what’s left to innovate with, in the coming year? I would keep a watchful eye on the credit card subsector. New products such as the Curve app are emerging, heavily influenced by the BNPL movement, alongside more rewards-based ideas.
Opening doors
The ascendancy of fintech has also helped ensure that private investors have gained access to UK Treasury bills. The UK Treasury has long sold very short-duration Treasury bills to institutional investors (with a duration of a month for each bill). For many years, the interest rate on these bills was almost imperceptible, but now that we have entered an era of higher interest rates these short-duration bills are a worthwhile investment, with recent yields above 5%.
This is where the upstart online broker Freetrade comes in. Fresh from its campaign to ensure that UK investors can still hold fractional US shares within a UK individual savings account (ISA), the platform last month launched a service whereby UK investors can keep investing in UK Treasury bills on a rollover basis and generate a very secure, high yield. Democratising access to investments that were once the preserve of institutions is exactly the sort of innovation that fintech platforms were designed to provide.
This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.
Related articles
- The fintech revolution is here to stay
- Buy the builders of the blockchain – the future of financial technology
- Klarna’s Sebastian Siemiatkowski: fintech innovator gunning for the banks
- The story of Wise, a multi-billion fintech started by accident
David Stevenson has been writing the Financial Times Adventurous Investor column for nearly 15 years and is also a regular columnist for Citywire. He writes his own widely read Adventurous Investor SubStack newsletter at davidstevenson.substack.com
David has also had a successful career as a media entrepreneur setting up the big European fintech news and event outfit www.altfi.com as well as www.etfstream.com in the asset management space.
Before that, he was a founding partner in the Rocket Science Group, a successful corporate comms business.
David has also written a number of books on investing, funds, ETFs, and stock picking and is currently a non-executive director on a number of stockmarket-listed funds including Gresham House Energy Storage and the Aurora Investment Trust.
In what remains of his spare time he is a presiding justice on the Southampton magistrates bench.
-
Should you invest in UK equities?
The FTSE 100 hit a record high this week, but UK equities remain unloved and undervalued compared to their global and US peers. Should you snap them up at a discount?
By Katie Williams Published
-
State pension errors: DWP urged to check for mistakes among divorced people
Former pensions minister Steve Webb says there are a high number of divorced women on low state pensions. Now MPs want the DWP to check if there were any errors in “potentially underpaying men and women who are divorced”.
By Ruth Emery Published
-
AstraZeneca CEO’s £1.8mn pay rise approved despite shareholder opposition
AstraZeneca hiked its dividend to persuade shareholders to accept CEO Pascal Soriot’s pay rise. Is he worth his salary?
By Dr Matthew Partridge Published
-
Adidas, Nike or Jordans - could collectable trainers make you rich?
The right pair of trainers can fetch six figures. Here's how you can start collecting vintage Adidas, Nike or Jordans now
By Chris Carter Published
-
The industry at the heart of global technology
The semiconductor industry powers key trends such as artificial intelligence, says Rupert Hargreaves
By Rupert Hargreaves Published
-
Three emerging Asian markets to invest in
Professional investor Chetan Sehgal of Templeton Emerging Markets Investment Trust tells us where he’d put his money
By Chetan Sehgal Published
-
What to consider before investing in small-cap indexes
Small-cap index trackers show why your choice of benchmark can make a large difference to long-term returns
By Cris Sholto Heaton Published
-
Why space investments are the way to go for investors
Space investments will change our world beyond recognition, UK investors should take note
By Merryn Somerset Webb Published
-
Time to tap into Africa’s mobile money boom
Favourable demographics have put Africa on the path to growth when it comes to mobile money and digital banking
By Rupert Hargreaves Published
-
M&S is back in fashion: but how long can this success last?
M&S has exceeded expectations in the past few years, but can it keep up the momentum?
By Rupert Hargreaves Published