The number of companies exploiting the internet to provide new ways of providing financial services is growing all the time. In this country, the best known are the peer-to-peer lenders such as Zopa and Funding Circle, which match up lenders and borrowers, and the fast-growing crowd-funding websites such as Crowdcube or Seedrs, which enable people to invest in new companies. But there are new ones coming along all the time. According to a report by Innovate Finance, the UK was second in the world for fintech funding last year, accounting for £675m of the £8.9bn raised globally. New ones are joining their ranks all the time – this month for example, Loot, a student banking app, said it was raising £1m in investment,
It is not hard to see why so many entrepreneurs and venture capitalists are rushing into the space. The internet is very good at ripping out the middlemen, and there is probably no industry with more of those, and better paid ones, than finance. From basic banking, to lending, to financial advice and broking, financial companies have charged high prices for what are often fairly standard tasks. There will be some big winners in the years ahead, There are already 24 with valuations of more than a $1bn, and the Chinese peer-to-peer lender Lufax was valued at an extraordinary $19bn earlier this year. Even more seriously, customers seem to like them. The Capgemini study found that 80pc of customers said that they had had good customer service from a fintech company – not the kind of numbers reported for the traditional players.