#TradingDebates: The fintech generation gap
- Fintech is attracting billions and expanding rapidly
- Capital access and talent make London a magnet
- City doesn't understand new generation
The fintech sector has seen quite explosive activity over the last year and much buzz has been generated about whether or not it represents a threat to the established financial services industry.
According to Gerald Brady, managing director at Silicon Valley Bank, some $11 billion has been ploughed into fintech startups and about one-third of this went to companies based in the UK.
London's attraction, says Brady, is due to the ease of access to capital in the City as well as to an abundance of young, creative and go-getting people. However, this go-getting bank of talent is also a major problem for the established financial services industry, says Julian Skan, a director at Accenture.
In an impeding generational shift, billions of dollars of wealth are due to be shifted from the baby-boomers to their offspring — the quite different sort of people who belong to Generation X and Generation Y. Traditional institutions, Skan says, don't quite understand this generation's adherence to new parameters such as social purpose and renewables.
One recent example was an organic vineyard in Sussex which had a top-up equity issue. However, a parallel hybrid crowdfunding issue that was massively oversubscribed, neatly illustrating the incoming generation's determination to put money where their loyalties lie. The second manner in which traditional financial institutions must improve is learning how to respond to the needs of this new cohort. "They need to be responded to in the way that they want," says Skan.
Ian Morgan, director of financial services at Google UK, also believes that the generation gap must be overcome to allow the City reap the benefits of this extremely well-educated and creative generation. "Generally, financial services are very conservative and risk averse," he points out.