A swirl of activity in the fintech space has been witnessed over the past few years, with Apple, Google, Amazon and traditional banks racing to stay ahead of rivals in the fast-growing sector.
Not only are new opportunities emerging at payment market leaders like MasterCard and American Express, but emerging fintech start-ups such as Transferwise, Prosper, and Lending Club, as a flood of capital washes into global fintech.
“A growth area over the past year has been the fintech sector, effectively straddling both finance and technology,” says Sarah Juillet, director of postgraduate careers at Cass Business School.
The battle between banks and tech companies for dominance in global payments has seen a war for talent break out.
“Companies like MasterCard are competing for talent with other companies in the traditional tech space such as Facebook, Google, LinkedIn, Amazon, and Microsoft,” says Roxanne Hori, associate dean of corporate relations at NYU Stern School of Business.
One of the triggers has been the launch of Apple Pay, which allows iPhone 6 users to purchase items with a whirl of their smartphone.
Google and PayPal have been racing to catch up. Google for example this year acquired Softcard, a joint venture between mobile networks AT&T, Verizon and T-Mobile.
The launch of Apple Pay is viewed as a catalyst for the broader adoption of mobile payments, which have the potential to expand the financial services market.
“There are a lot of new ways to pay that are coming out, such as contactless and Apple Pay, which are eroding the market share of cash and increasing the convenience of card and non-cash payment methods,” says James Allgrove, head of UK growth at Stripe, an online payments company recently valued at $5 billion, at a conference organized by Fintech Week 2015.
Other smaller companies — some of which are being targeted by banks for acquisition — include Dwolla, a network for cheaply transferring money, and WorldRemit, an online money transfer business founded by a London Business School MBA.
WorldRemit, which employs 150 at its London headquarters, has expanded to serve 50 markets, says Alix Murphy, senior mobile analyst. “Our company has grown very fast,” she says. Customers can transfer cash to 120 countries, many to mobile money wallets in the developing world.
Fintech start-ups have grown in popularity by offering faster and cheaper services than traditional lenders, which have come under pressure on the fees they charge consumers.
“Our customers typically use us to get to the market very fast or to get to parts of the world they can’t otherwise reach,” says Todd Latham, vice president of marketing at Currency Cloud, which delivers cross-border payments as a service.
Since launching in 2012, Currency Cloud has grown to have 80 employees and processes $10 billion in payments a year. “We are growing very quickly,” Todd says.
Another start-up, Azimo, a mobile and internet based money transfer business, has grown to have between 50-200 employees, and this summer raised $20 million from investors.
Marta Krupinska, co-founder and general manager, says that speed of pay-outs has been incredibly important for the company to gain a toehold in the $600 billion global remittances market.
The tech behind mobile payments is revolutionising access to finance in emerging markets in particular.
Africa — where less than a quarter of people have a bank account, but more than 80% have access to mobiles — continues to lead the way.
Users of M-Pesa, the leading African mobile money service, send an average of $44 million each day via 6.8 million transactions.
Jean-Stephane Gourevitch, founder and CEO of Mobile Convergence Ecosystems, a consultancy, estimates that mobile money represents 60% of Kenya’s GDP.
“Africa has seen some really tremendous successes,” he says. In emerging countries mobile banking is an important element of both financial and social inclusion, he adds.
In China too there has been significant disruption to the financial services sector, with tech companies Alibaba and Tencent pushing further into mobile payments.
Yu’E Bao, an online money-market fund run by Alibaba, reached $96 billion in assets under management at the end of last year. Alibaba will also partner with Fosun International, one of China’s largest conglomerates, to form Zhejiang Internet Commerce Bank this year.
Mobile Convergence’s Jean-Stephane sees further growth in the west too. In the US for example, 20% of the population remains unbanked, while in the UK growth has been seen in the adoption of contactless across London’s transport system, TFL.
“Mobile payments is growing in developed countries,” he says. Global investment in fintech is growing fastest in the European market, according to Accenture, with the UK and Ireland accounting for 42% of the $12.2 billion invested globally last year.
Meanwhile, the growth of fintech has seen nimble start-ups attract talent from top business schools, even poaching staff from investment banks. Astbury Marsden, the London recruitment firm, says banks are “acutely aware that they are fighting a war for talent with the fintech companies”.
Mark Davies, employer relations manager at Imperial College Business School, says: “There has been a very recent increase in interest amongst MBA students in fintech.”
Avinash Agrawal joined Bankable, a fintech start-up that offers banking as a service, in 2013, the same year he graduated from HEC Paris, a leading French business school.
The venture’s head of product strategy and commercialisation says Bankable works with clients from banks to other fintech start-ups: “Our vision is to displace payments inefficiencies for enterprises as well as consumers.”
Mobile banking usage is expected to double over the next four years, from 800 million people to 1.8 billion, according research from UBS and KPMG. But many in the sector do not see digital replacing cash altogether.
Dave Wascha, global digital product director for Travelex, a foreign exchange company, says: “People take refuge with the fact that they can pay with cash. People fundamentally also have a distrust of financial institutions.”
Anyone hoping to work in mobile payments will also keep a close eye on regulation in the UK from the new Payment Systems Regulator, while the EU has similarly looked at tighter regulation of the payments sector.
“Huge change is coming,” says John Salmon, partner and head of the financial services sector at law firm Pinsent Masons.
Bayes Business School
Best Journalism school in Europe
When I first stepped onto the campus of City, University of London, I knew I was in for a ride - and not just on the Tube! With its vibrant energy and an impressive repertoire of programs, City U became my home away from home. The Journalism program was kind of a big deal. Rumour was that we were the best in Europe! The lecturers were not just experts in their field; they’re practically journalistic royalty. They were invested, passionate, and had a knack for turning the most flat press release into a riveting news story. With their guidance, I’ve learned to navigate the chaotic world of media like a pro. The campus was a melting pot of every culture, being that we had such a diverse international crowd. Being in the heart of London, I had the world at my fingertips - there was always a new corner to explore, a hidden gem of a cafe to discover, or a street performer! City, University of London wasn't just a university; it was a chapter in my life story that I’ll never forget.
The teacher-learner ration is manageable, giving each learner a chance to gain personal attention. It is also easier following up on the progress of a student, as the numbers per class is not large. the conducive environment for learning includes clean classes, standard desks, world class instructional facilities and the opportunity to engage lecturers even after their sessions. The team spirit at City is above board, with learners getting chance to learn both from instructors and colleagues. This is the university of choice; the place to be.
I liked that each class had a manageable number of learners, making the professor-learner ratio favor knowledge acquisition. I also liked that study schedules were manageable, and not overwhelming. The focus on talents and gifts even within the learning environment makes it possible for learners to achieve the best of their potential, and this has worked to the advantage of those that have schooled at City, University of London
The diversity at City University facilitates interactions and is a direction toward the unity of the world. The classes are well built to match the number and needs of all students regardless of the elements of diversity that set people apart. The use of technology in delivery makes learning even more interesting and achievable. At City University there is no distinction pegged on the issues that make people unique.
The team of lecturers at the Uiversity are well experienced. Their level of insight and the methodologies of delivery works for the interes of the leaeners. My learning experience was largely boosted by the level of knowledge of the professors at the institution, and their passion to transfer the same to learners. I appreciate every class I attended because of the level of insight I was able to gather
The best university I’ve been to
The campus and the people I've met have made it a wonderful experience. I was reared in a small town with a graduating class of only 88 individuals, so moving to City University was a huge adjustment for me. My dorm has more residents than my whole high school combined! I enjoy the atmosphere here, and everyone is so friendly. Outstanding academic options and a stunning campus. Really great from beginning to end. The educators genuinely love what they do, and the students are ready to learn. On or around college, there is always something to do with friends, and the social scene is particularly warm.
Bayes Business School
As a student at City university attending Bayes Business School I would totally recommend choosing this university as the experience is exceptional with great social networking opportunities . Professors are significantly helpful, delivering with excellence and professionalism. Everyone is happy to help and make you feel welcomed in such an esteem university as City, offering exceptional development and guidance through out the course.
Economics and Politics
Incredibly amazing university, the way they polish students and help them boost their morale and think intellectually is worthwhile. Many universities have international partnerships to allow exchanges between their students. The most obvious subjects for these opportunities would be those that involve languages, and the study of people and places.