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Why is fintech such a hot topic nowadays?

Fintech

The technology revolution is forever upon us. In recent years, there have been many developments in technology, and now more than ever before, people are integrating it into every part of their lives. The advancement of technology from analog electronic and mechanical devices to the digital technology available today marks the beginning of the Information Era. Mobile technology has considerably reorganized every sphere of human life: it has changed the way we talk to each other, the way we shop, how we travel, how we see ourselves and how we see others. The information we have access to is infinitely greater than it has ever been.

Financial institutions have always been more traditional and slow to adjust trends but the revolution swept through the sector like it did all the others. Fintech is not just another buzzword. Investopedia, a website which serves as a strong online source of financial education, describes it as a portmanteau of financial technology which defines an emerging financial services sector in the 21st century. Fintech companies are on the rise and it is perhaps not a coincidence that this began at a time that coincides with the Global Financial Crisis of 2007-09. Entrepreneurs will always think of ways to capitalize on opportunities, deliver competitive products, and enter sectors previously dominated by other players. These new companies have been quicker than banks, the established institutions, to take advantage of advances in digital technology. Research released by a bank – Santander InnoVentures – explains why this is not a surprising development: “These new players are less burdened by the demands of regulatory compliance which banks are subject to. They are unencumbered by complex and costly-to-maintain legacy systems. They can focus on creating single-purpose solutions, designed to offer an improved experience within just one product or service. They are more in tune with the peer-to-peer (P2P) culture engendered by the explosion of social media. And they are smaller organizations, designed for the purpose of innovation. Capital has flowed into the Fintech sector: $23.5 billion of venture capital investment in 2013/14. Of this investment, 27% has been in consumer lending, 23% in payments and 16% in business lending. Fintechs have two unique selling points: better use of data and frictionless customer experience.” [1]

As of 2015, developing payment solutions appears to have reached a certain level of maturity and are no longer the focus of Fintech innovation. Asset management and wealth was the biggest Fintech growth area, according to a report by PWC, a professional services firm: “2015 was the year investment management staked its claim in Fintech. Up until now the industry has seen little disruption and innovation but 2015 saw an explosion of investment focused on startups working on B2C, B2B, robo-advisery, big data, machine learning, equity research, automated portfolio selection. […] Fintech will transform the way the investment industry operates and empower investors to make better decisions.” [2]

Baxon identified this need long before the mass market. With more than 10 years of experience, we are focused on supporting and enhancing the portfolio management process. The web-based platform, Baxon PCMS, streamlines the entire portfolio monitoring and valuation process, from the collection of data from portfolio companies to internal and LP reporting. Baxon PCMS brings much-needed improvement to fund managers that want to move away from obsolete processes such as manual reporting in Excel and basic presentations which absorb a lot of resources. A fully cloud-based solution, Baxon also eliminates the need for purchasing and installing hardware and software. Information can be accessed by staff anytime, anywhere since the solution is also designed to run on mobile devices. No staff are required to maintain and update the software as more users are added and the most up-to-date functionality is always available.

Several research papers encourage even more investment to be pushed into Fintech. With all other sectors implementing new software continually, ignoring innovation can be dangerous for businesses. Our job is to constantly be looking for that next level. And frankly, for the companies that are doing better, the efficiencies they can gain by properly reporting on their investments are that much more powerful – the small cost of implementation quickly converts into savings that will multiply by eight, nine, ten, etc. when they exit, depending on their multiple.

The bottom line

Automated technology is changing the landscape of asset management and investing by allowing for better reporting and planning across all investment outcomes, while freeing up advisors’ time so more can be devoted to business needs. The industry is facing a period of increasingly disruptive innovation in reporting and Baxon is ideally placed to help fund managers stay ahead.

By Corina Grigore, Baxon Solutions Consultant


[1] “The Fintech 2.0 Paper: rebooting financial services” by Santander InnoVentures, in collaboration with Oliver Wyman and Anthemis Group
[2] http://pwc.blogs.com/press_room/2016/03/payments-innovation-slows-as-investment-managers-see-explosion-of-fintech-startups-startupbootcamp-a.html