At the same time, nothing stops you from retraining and pursuing a career in an industry that is beginning to take off. Emerging industries have always been a thing, and the new industries are often popular with existing and budding entrepreneurs alike.
Knowing what these industries are is the critical first step, and that is where we come into the picture. Below, you will find a list of some emerging industries that have dominated the business scene for the past few years and which look set to remain.
Regardless of what industry you are looking to move from or into, read on to discover more about these industries, as well as a bit about what you can do to be successful in your upcoming career switch.
What Is An Emerging Industry?
Before getting into the swing of things, let’s take it back to basics. For those who are unsure, Investopedia defines an emerging industry as when a product or idea is in the early stages of development, and numerous companies focus themselves on this idea. Generally speaking, this happens when a new form of technology is discovered or created, replacing an older counterpart.
As you might have grasped following from this definition, there have been numerous emerging industries throughout the last few decades, running alongside the numerous technological advancements that we have seen. These include the following industries:
1. Artificial Intelligence (AI)
AI is something that is becoming all the more commonplace but is a phenomenon that is still confusing a lot of people. The technology that is used for this emerging industry is continuing to develop and grow and is being used more in our day-to-day lives than ever before. While some might find this form of technology problematic, it has proven to be incredibly helpful to numerous industries.
Various industries and businesses use this emerging technology; it is even used by some government departments here in the United States. There are numerous jobs available in this emerging industry, and they can be attained by learning the associated skills that often link closely with computer science as a field.
2. Fintech
The running theme throughout this piece will be that most emerging industries relate to the likes of technology in some way or another. Fintech, also known as Financial Technology, is the process of competing with or replacing more traditional methods of delivering financial services with a form of technology. Much like other forms of technology, this is something that is continuing to grow and develop while also revolutionising the ways that we complete tasks. As a result, there is always something new to learn about this emerging industry.
Fintech courses online allow interested parties to learn more about this form of technology while retaining their existing skills in the hope of moving into this as a career. Completing this fintech course from Harvard University Online in your own time ensures that you can make the switch into the industry at your own pace and when the timing is suitable for you. Financial services will always be required; there is no doubt this is an industry and form of technology that is here to stay.
3. Renewable Energy
This is a term that we feel many people reading this and beyond are familiar with, for it is something we have grown accustomed to throughout recent decades. There has been a significant focus on renewable energy throughout the years, with this idea gaining more traction since the United States rejoined the Paris Climate Agreement.
Clean energy is important to many people, not just those who are eco-conscious. The renewable energy industry is set to grow exponentially in the coming year, with analysis experts estimating that the growth could pose a threat to the traditional use of coal.
Expanding into an industry like this is a lot easier than most people realise. Beginning your career change by volunteering in the sector to develop your passion is the best place to start. From here, you can learn more about the processes and establish whether there are more specific skills that you need to learn and develop before applying for a role.
It goes without saying, but emerging industries provide a multitude of career and growth opportunities. Understanding what the first steps are and moving forward from there is sure to ensure you land a career you are happy with. No matter which emerging industry has caught your eye, go forth knowing you are making the right moves and will be working with the latest technologies in no time.
As most global activity defaulted to remote, FinTechs were able to cater to this trend by offering digital tools that solved a whole host of new problems businesses were now faced with - in the case of Soldo, for example, by offering visibility for finance teams as they increasingly found themselves in the dark as a result of remote working.
As a consequence, it’s been pleasing to see a significant increase in FinTech investment over the last year, in spite of a rocky economic landscape. This has been particularly pronounced in the US, where private equity investments have grown from tens of billions of dollars several years ago to hundreds of billions, approaching trillions of dollars - if counting the market caps of firms that have gone public.
But what does 2022 have in store for the sector? Will the industry continue to thrive and what challenges will need to be surmounted in order to ensure this?
The post-pandemic boom
2022 will hopefully see the end of the COVID-19 pandemic and, with this, a subsequent economic boom. Soldo’s recent report with Coleman Parkes entitled Open for Business looked at how finance teams are planning for this and the opportunities and challenges they see. We found that almost three quarters (70%) of UK businesses are prioritising growth in the next 12 months – with 44% saying their strategy will be to raise new capital, and a third (33%) to acquire businesses through mergers and acquisitions.
The report also highlights that (72%) believe greater visibility, control and oversight across expenditure has a positive impact on revenue growth. In preparing for this, finance teams are turning to investments in technology, and specifically automation tools. Two thirds (66%) cited investments in IT tech and automation as key drivers of profitability, while almost three quarters (74%) have invested in automation to manage employee expenses. FinTechs will hence have a critical role to play in facilitating post-pandemic growth and need to capitalise on the opportunities that the needs of businesses will present.
The great “switch on”
The economic instability brought about by the pandemic caused many businesses to shift into survival mode and cut back on spending, limiting expenses to the strictly essential. However, with the end of social distancing measures, events, meals, drinks and travel are increasingly once again becoming a part of working life.
For finance teams, this great “switch on” means having to manage an influx of POs as workers look to enjoy their renewed freedoms, and this is only set to increase into 2022. This will have to be balanced against managing the costs of the coronavirus crisis, with Bounce Back Loans and deferred tax payments having to be paid off.
With so many UK businesses geared towards growth, the pressure is on finance teams to deliver a holistic view of spending, control costs and implement systems that provide the business with a level of data insight that is essential to driving growth – in whichever format that takes. This pressure provides further opportunities for the FinTech sector to step in and offer solutions. Without the right tools and services in place, finance teams will undoubtedly be wasting precious time that could be better spent on initiatives that aid strategic growth.
Europe vs the World
The global FinTech landscape is in constant flux and it will be interesting to see how this plays out in 2022, particularly how European FinTech businesses hold up in the face of increasing competition from elsewhere in the world.
Providing that COVID-19 has no further nasty surprises to throw our way, we can expect the next 12 months to see a huge global economic rebound.
The EU is currently home to only 7.2% of worldwide unicorns. The sum value of all EU unicorns and EU tech and digital champions already public is dwarfed by the value of today’s non-EU big tech. This allows the latter to buy out potential disruptors, solidify industrial control, build scale, and manage the global digital and tech agenda – and we should expect this trend to continue upwards in 2022.
We have watched the development of China’s FinTech space with particular interest and expect to see a continued rise in 2022. As of April 2021, the sectors home to the highest number of unicorns in China were technology and telecommunications, and transportation and logistics. However, Chinese unicorns active in finance or insurance had significantly higher market valuations than unicorns in either of these sectors.
Maintaining high levels of innovation is a key challenge for European FinTech. In the EU, ensuring innovation is essential to both territorial cohesion and growth. Government, as well as business, has a role to play in facing this challenge. It can do so by reducing fragmentation of regulation across the EU’s main innovation areas and removing unnecessary obstacles. It is equally important to have close cooperation with the existing expert organisations who unite various European innovation industries.
Final thoughts
We all hope that 2022 will bring a return to true normality and much needed social and market stability across the globe. Providing that COVID-19 has no further nasty surprises to throw our way, we can expect the next 12 months to see a huge global economic rebound. This will mean that opportunities for the FinTech sector will be in no short supply. But FinTechs, investors and governments alike must not be too complacent about the inevitability of bouncing back. Careful planning and management will still be required to ensure opportunities are not squandered.
The relief will be short-lived, however, as business travel is coming back. According to Deloitte research published in August 2021, "competition and growth imperatives will necessitate a resumption of business travel". In the same month, the UK's Department for Transport stated that more than a quarter (27%) expect to make more trips than they did before the pandemic. We need, then, to consider how we can create a new 'normal' for business travel if we don't want to simply return to the old, inefficient, and stressful way of doing things.
FinTech can solve expenses headaches
Post-pandemic, we have a chance to set a higher standard for business travel. We might not be able to entirely eliminate the tedious waits in departure lounges, traffic jams and nights spent in drab hotel rooms, but there is an opportunity to take a great deal of the pain out of the whole process. Flexible FinTech-enabled solutions can have a positive impact on the future of business travel, as well as how many organisations currently deal with expenses.
Chances are if you work for a large corporation and you need to travel regularly you will have a company credit card. But for many people who don't work for companies of that size, the process can be rather different, relying on the individual to pay for flights, car hire, accommodation and so on themselves, filing an expense claim when they ultimately get back to the office. Alternatively, there may be a single card tied to a business account in the name of a senior staff member being handed around between employees as and when they need to use it.
Both of these scenarios are problematic. In the first case, the employee has to use their own money, while the company has no idea how much and where money has been spent until the expenses claim is made. In the second case, there are massive security implications and vendors may very well fail payments if they realise the person using the card is not the registered cardholder.
Addressing the needs of the SME sector
What's required, then, are solutions that help SMEs to better process travel expenses. They need to provide flexibility for the employee, who may very well be incurring additional costs when travelling for work. For example, some countries require PCR test certification for entry — which comes at a cost — while private methods of transport such as a car hire are safer than public transport such as aeroplanes and trains, but will also come at a premium. Organisations, too, need to have better visibility on what employees are spending and where they are spending it, as well as any fees they incur for things like FX exchange if payments are made overseas.
The COVID-19 pandemic also brought the way SMEs deal with expenses into sharp focus for other reasons. All of a sudden, people needed to work from home and many of them didn't have the correct equipment — laptops, monitors, keyboards, desks, chairs and so on — so they had to stump up their own cash and claim the money back. The alternative was days or weeks of inactivity; something that no business can afford, no matter its size. The situation was far from ideal but many smaller organisations had little choice but to do it this way.
It's true to say that the SME sector is one of the most neglected segments when it comes to financial services — for many banks, it's seen as an unprofitable area, and they'd rather focus on the large corporate clients where there is much more money to be made. SMEs are also not usually the target of the cutting-edge, user-friendly financial products that proliferate in the consumer market.
Massive market opportunity
However, SMEs are typically digital-savvy, lean organisations that welcome innovative solutions. It's a shame, then, that when it comes to banking they often have to use services that are expensive and designed for much larger organisations. While we're starting to see FinTech companies targeting SMEs in markets like Spain and Germany, these tend to be focused on providing access to finance. There is still a big opportunity for new entrants to the market who can address the very specific needs of companies of this size when it comes to making tricky — but very necessary — processes more efficient. For example, FinTechs that make corporate debit cards an accessible solution for SMEs enable them to better manage employee spending.
Business travel is coming back, and there is enormous potential for positive change. Obviously, there should be a reassessment of whether many of the journeys are actually necessary in the first place. But many companies also need access to the same kind of banking services that their larger competitors do in order to drive efficiency and take the strain away from their employees.
How well organisations adapt to the future of business travel will depend on the availability of flexible financial solutions. There is a significant gap in the market for FinTech players to address the needs of small- and mid-sized businesses — not just when it comes to business travel, but expenses in general.
BE AT THE CENTRE OF THE FINTECH REVOLUTION
Now in its 8th year, FinTech Connect returns virtually in December 2021. Join us online for two content packed days where you can hear from and meet global leaders in digital transformation, payments, blockchain and regtech who are driving the global financial technology industry forwards.
FinTech connect is the premier event for the FinTech industry and has been welcoming some of the biggest names each year for nearly a decade. Finance Monthly is delighted to be partnering with FinTech Connect this year and we're excited to be a part of this inspiring event.
Whether it be a challenger bank, innovative merchant, central bank, tier one financial institution or cutting-edge tech player, come and join them at FinTech Connect 2021.
These industry leaders will be talking about their challenges and successes in AI, Open Banking, CBDCs, DeFi, Embedded Finance, Fraud, AML and digital transformation and more!
Featuring speakers from some of the most forward thinking financial institutions globally including:
- HSBC
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- World Economic Forum
- Swift
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And many more.
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Where should the everyday investor start?
One option that is growing in popularity is app investing. With an estimated 3.2 million users across the UK’s top 10 investment apps, it is evident that the number of people looking to invest for their future is only growing. However, still being new territory for many, exactly how accessible are investment apps for beginners?
What are the risks and what should new investors know before committing their hard-earned money?
Historically, investing has been associated as something for the wealthy, with many believing it requires detailed knowledge about stocks and other investments such as cryptocurrency or precious metals. In fact, the research showed that 50% of people are being put off investing due to a lack of knowledge and confidence. But app investing is challenging that stereotype, with the hope of encouraging more to try it out.
With minimal fees involved and the option to invest small amounts at a time, fintech apps are making investing a viable option for all. Using a well-designed platform, everyday investors can begin to grow their wealth from the touch of a smartphone. In-app discussion creates a sense of community, by allowing fellow users to share their insights, experiences, and opinions with one another, giving beginners vital knowledge about the fundamentals of investing.
To encourage users to view app investing as a feasible option, many apps are also offering free trials, giving investors the chance to experiment with practice accounts. In addition to providing an insight into how the platforms work, this can offer users a low-risk opportunity to build their confidence by learning how to manage a portfolio and make trades, before involving real money.
While app investing offers a number of benefits, users must ensure proper research is carried out. An understanding of the service is paramount in mitigating risks. Before involving money, users should look at the credibility of the app they are interested in and other important information such as its founder credentials and app regulations, as well as past reviews, both from users and the industry. This can help provide a clear picture of the positives and negatives of each app, allowing the user to make an informed decision about which platform can best support their financial goals.
In addition to background information, users should also be aware of any fees and the service included within this price. Being knowledgeable around this is crucial, particularly for beginners investing smaller sums, where fees may eat into any returns. New users should begin by looking at the terms and conditions of the app to understand what they are signing up for. For example, delays between requesting cash and it being received can often be overlooked, which can affect overall return, so users need to know where they stand.
When starting to invest, people should look to spread their money in multiple smaller amounts rather than one large sum, to help spread the risk. Looking at personal finances and only investing what is affordable is critical to managing money effectively and avoiding any financial difficulties down the line. Individuals must be disciplined and rational; markets can go up and down, so it’s important to avoid reacting quickly to market volatility.
With more people beginning to download and use investment apps, what does the future look like for fintech?
One thing is for certain, it’s showing no signs of stopping. AI is already being used for trading bots, meaning users can expect to see the role of AI increase and diversify across platforms in the future. In addition, apps that round up total spends and invest the difference when online shopping continue to emerge in the market, allowing people to make savings that adapt with their spending habits.
While the future of app investment looks to be a prosperous one, with more users comes tighter regulation. More stringent checks during onboarding are to be expected, to assess individuals’ affordability and investment competence, preventing financial fallout. App investing is an innovative solution that enables users to continue to find new and adventurous ways to manage their money and explore everything from stocks and shares and cryptocurrency, right through to precious metals such as silver and gold.
About the author: Hamzah Almasyabi is CEO at MintedTM, an investment platform that allows individuals to buy and sell precious metals.
On Tuesday, Stripe, which supports businesses in accepting online payments, said it had agreed to a strategic partnership with Klarna to offer its “buy now, pay later” payment method to Stripe’s merchants. Koen Koppen, Klarna’s chief technology officer, said, “Together with Stripe, we will be a true growth partner for our retailers of all sizes, allowing them to maximize their entrepreneurial success through our joint services.”
Stripe says that the agreement will make it easier for retailers to add Klarna as a payment option on their website. Klarna usually partners with retailers directly to embed its checkout button on their sites. However, the agreement with Stripe could give Klarna a much wider client reach. The Swedish fintech generates revenue through deals with retailers, which pay it a small cut on each transaction processed via its platform.
According to Stripe, early results reveal that merchants experienced a 27% increase in sales on average after integrating with Klarna. The average order value, meanwhile, increased by 41%.
Critics of “buy now, pay later” platforms have accused companies such as Klarna of encouraging customers — often people who are young or on lower incomes — to spend money on items they cannot realistically afford. In the UK, the government has introduced proposals to regulate the industry in order to protect consumers from potential financial harm.
The sale was priced at 815p per share, representing a 4% discount on Thursday’s closing price. Hinrikus sold around 10 million Class A shares in the company, which debuted on the London Stock Exchange in July.
Wise has said that it understands Hinrikus intends to use the proceeds from the sale and loan to invest in European tech startups. However, Hinrikus’ private investment firm will maintain a hold of its 54 million class B shares in the company.
Earlier in the week, Wise revealed a growth in second-quarter revenue driven by higher customer numbers, partly attracted by lower prices. Wise said that nearly 4 million customers transferred approximately £18 billion over the period. This is an impressive 36% increase from 2020.
While Wise expects its take rate for the second half to be somewhat lower than in the first half, it nonetheless anticipates revenue growth for the year to March 2022 to be in the low to mid 20% range over the previous year.
The changes include a “pay now” or “buy now” option which will allow Klarna users to pay for items in full right away. The introduction of this new feature follows criticism that the use of “buy now, pay later” services encourages people into debt.
Klarna, like similar services, offers its users the opportunity to delay or spread the cost of a purchase without being charged interest or fees. This is especially appealing to young and low-income shoppers who may have a harder time meeting the repayment. Critics of the platform also say that people are bombarded with messages and adverts urging them to use the “pay now, pay later” service without there being a straightforward explanation of how the service works and what it involves.
Klarna says that its new feature, as well as other changes, will give customers greater control and clarity. The company also said that it would be performing more thorough checks on how much users can realistically afford to borrow and will begin to use clearer language during the checkout process to protect users.
While it is a new introduction for the UK, Klarna’s “pay now” option already exists for customers in several other countries.
The company has recently announced that it’s intending to hire hundreds of new staff members in a bid to undergo significant expansion into Europe alongside its IPO. “We’ve always had European origins as a firm, but they’re becoming increasingly important,” said Matt Henderson, Stripe’s business head for Europe, the Middle East and Africa.
Stripe’s expansion into Europe has been steadily gathering momentum over the past year, the company began hiring new engineers for its London office in 2020 and expects this momentum to continue into the future as Stripe sets its sights on global growth upon going public.
As part of its IPO preparations, Stripe’s London office is set to focus largely on growing non-financial company offerings, like bank integrations such as transfers and open banking. In fact, in the coming weeks, engineers will begin testing a “pay-by-bank” integration to the payments network.
With such activity bubbling under the surface, it’s perhaps no surprise that Stripe has reportedly entered into early discussions with investment banks about the prospect of going public in 2022. The 11-year-old payments provider is said to be considering an initial public offering, but may even opt for a direct listing - although plans were subject to change.
Image: The Strategy Story
As 2021’s most valuable private firm in the US, weighing in at a seismic valuation of $95 billion, the prospect of a Stripe IPO would undoubtedly cause a stir to say the least. Should the favourable market conditions that we’ve become accustomed to this year continue into 2022, an initial public offering for the payment giants may return record-breaking results. But what would a Stripe IPO look like? Let’s take a look at what the future has in store for the wildly successful fintech startup.
What A Stripe IPO Could Look Like
With an estimated value of almost $100 billion, a debut would mean that Stripe overtakes fellow fintech Coinbase’s direct listing in April 2021 at a value of $86 billion. Like Coinbase, Stripe may decide to avoid launching an IPO entirely, opting for a direct listing instead. This would mean that investors will need to wait until the stock arrives on its chosen market on its first day of trading, which is likely to be the NASDAQ at the time of writing.
The company has reportedly already begun the preparatory process of going public by hiring law firm, Cleary Gottlieb Steen & Hamilton LLP as a legal advisor on the early stages of their preparations. However, there’s still very little that we can know in terms of absolutes as to when, where and how a Stripe stock is set to arrive.
Can Stripe’s fundamentals support a mega IPO? Well, the company raised $950 million through VC funding in 2019 and 2020 alone - with a $600 million round arriving in 2020 during the peak of the Covid-19 pandemic. The company itself experiences sizeable growth during this period due to the rise of online shopping and electronic payments. With a further $600 million raised in 2021, Stripe’s revenues had reportedly climbed to $1.6 billion in 2020, with a workforce 4,000 strong at the time.
As for competition, Stripe has industry giants like PayPal and Square to compete with. With a market cap of $305 billion at the time of writing, PayPal is a formidable competitor for Stripe - and one that may yet stifle the fintech’s expansion efforts. But amidst a rapidly growing fintech market, there’s likely to be room for both entities to comfortably co-exist to the point where this shouldn’t hinder a prospective Stripe IPO.
Capitalising On A Prosperous Fintech IPO Market
Image: Digital Insurer
The emergence of the Covid-19 pandemic had a significant impact on the fintech industry. Digital transformation brought with it a widespread trend towards more online shopping and electronic payments - which has helped to aid the sustained growth of countless emerging fintech firms.
As the data above shows, it took just seven months in 2021 to overtake the global VC-backed deal activity for fintechs in the entirety of any of the five years prior. This illustrates the seismic growth that is sweeping through the industry. Although this indicates that growth is occurring for Stripe’s direct competitors in the industry, it also opens the door for more advanced collaborations across the fintech landscape.
We can see evidence of emerging technologies in the field of decentralised finance and borderless payments that can collaborate with fintech institutions to deliver more advanced products. In the case of emerging companies like Connectum, we can see an example of a VC-backed platform that has the ability to deliver borderless financial services through multi-currency processing, one-click payments and 3D secure, AI-powered transactions to send money globally in a frictionless way.
Image: FX Street
As the table above illustrates, global fintech M&A and IPO activity are also on the rise - indicating that the industry is maturing at an unprecedented rate. With 10 and 11 IPOs arriving in Q4 of 2020 and Q1 of 2021 respectively, it’s clear that the fintech industry is booming at present.
This shows that the prospect of a Stripe debut is likely to be a significantly popular one across the market. Should momentum continue to build from 2021 into 2022, Stripe’s debut, regardless of whether it’s an IPO or direct listing, is certain to be a key contender for the biggest of the year - and a real statement of intent for the wider world of fintech.
In August, news broke that PayPal was exploring the possibility of creating a stock trading platform. This marks a considerable inroad towards retail investment, having rolled out the ability for customers to trade cryptocurrencies last year.
The company has even hired brokerage industry veteran Rich Hagen as part of the move - who has reportedly become CEO of a previously unreported division of PayPal called Invest at PayPal.
Image by Nasdaq
As the chart above shows, PayPal’s potential foray into the world of retail investing may have been sparked by significant growth in the user base of online brokerages throughout 2020. While the pandemic may have aided new customers in making their first trades through stimulus packages and the free time afforded by social isolation measures, it’s also worth noting that brokerages have become far more popular since adopting zero-commission payment for order flow operating models.
So far, 2021 appears to be telling a similar story in terms of mass retail investor growth around the world, and experts believe that PayPal is eager to tap into this rise in adoption.
“The surge in retail investing, as well as the knowledge that more than 10 million new investors entered the market in the first half of 2021, are driving PayPal's interest in this industry,” explains Maxim Manturov, head of investment research at Freedom Finance Europe. “PayPal wants to ride this wave while also keeping up with the competition. Since then, Robinhood Markets, Inc. has grown to over 22.5 million net accounts by the conclusion of the second quarter of the 2021 fiscal year, an increase of 129.6% year over year.
Meanwhile, Square, Inc., PayPal's main competitor in the payment processing sector, has already incorporated features to its Cash App payment service that make it easier to trade equities and cryptocurrencies. And this is a major milestone in the evolution of the PayPal ecosystem. PayPal is a well-known brand that handles 22% of all online transactions in the United States and has a high degree of consumer trust. These criteria indicate that if it enters the retail investment market, it will be rewarded with a more extensive user base.”
PayPal’s Industry Muscle
PayPal will be aiming to leverage its industry muscle to compete with established online brokerages like Robinhood. Today the payments giant is responsible for leveraging 22% of online transactions in the US, while also retaining a relatively high level of consumer trust along the way.
Image by Insider
With such significantly high total payment volumes around the world, PayPal could feasibly enter the market as the largest brokerage on the planet, with some 400 million customers already in place worldwide.
PayPal’s global reach may also help on its path to prominence, with the possibility of accessing markets that the likes of Robinhood haven’t yet accessed, due to Robinhood only being available for US-based customers at the time of writing. However, some market commentators have expressed their fears that, although PayPal boasts a significant global user base, it may be too late for a party that’s been building throughout 2020.
Late To The Party?
Despite its huge volume of users, PayPal may still run into trouble winning over retail investors for their new service - particularly in the US where Robinhood has already performed exceptionally well in months.
In conversation with Motley Fool’s Industry Focus host Jason Moser, financial planner, Matthew Frankel expressed his bafflement that PayPal had taken so long to push forward with plans to launch their own online retail brokerage.
“My other adjacent thought to that is, are they late to the party? Has everyone else already scooped up that? Stock trading exploded in the middle of 2020,” Frankel added, noting that in missing the pandemic investment gold rush, PayPal may find itself at a disadvantage in winning over users who may have already acquainted themselves with other brokerages.
Image by CB Insights
As the data above shows, Robinhood’s monthly active users swelled to 20 million in the early months of 2021 - owing to the sheer volume of coverage that the platform received in the wake of the Gamestop short squeeze. The trading app has now become synonymous with meme stocks and although its reputation has taken knocks from many Wall Street stalwarts like Warren Buffett, it didn’t stop Robinhood from going public in the summer of 2021 and attaining a sizeable market cap of around $35 billion at the time of writing.
However, PayPal is far longer in the tooth than Robinhood and the company’s market cap of $316 billion shows that it certainly has the resources to make a success of whatever new concentration it turns its hand to. Winning over Robinhood’s network of retail investors may be one thing, but PayPal certainly has the ability to mount enough of a campaign to woo new users.
Regulatory Hurdles
However, a bigger hurdle may be lurking around the corner in the form of the regulatory boundaries that PayPal will need to navigate. If PayPal wants to create its own brokerage subsidiary, regulatory approval will need to take at least eight months to complete. The US Securities and Exchange Commission (SEC) has already made it clear that it’s concerned about the level of ‘gamification’ taking place in the retail investing market of late - and the arrival of new key players may compound those fears.
Ultimately, the unease of the SEC may cause the required approvals to take longer, while the commission has also made it clear that it’s considering imposing a ban on the popular payment for order flow investing models that have helped to bolster the revenue of Robinhood and many other industry leaders.
Should PayPal opt to create its own retail investing tool, it will be entering an industry that is perhaps at its most volatile stage. However, with an ever-growing base of active users, PayPal is aware that it’s tapping into an industry that’s become extremely popular in recent months. With the right navigation, the payment giants may be able to hurdle its uncertainty and make a big splash in the ever-popular retail investing landscape.
Wise’s new investments feature, called Assets, allows customers to invest in BlackRock’s iShares World Equity Index Fund which tracks a basket of over 1,500 of the globe’s largest public companies. The fund’s holdings include Amazon, Apple, and Alphabet.
Users will also have the option to instantly spend up to 97% of the invested funds in their accounts via a Wise debit card and send money overseas. The idea behind this is that customers can hold their money in stocks but are also able to spend and send the funds in real-time.
Wise’s CEO and co-founder Kristo Käärmann said: “Holding money in various currencies can be hard to manage efficiently. Assets is seeking to solve that problem, by providing an opportunity for customers to earn a return on their money with us, in a host of different currencies, all in one place.”
Wise explained that it is keeping back 3% of users’ invested funds as a buffer in case of any significant fluctuations in the market and to prevent users’ balances from dropping into negative territory.
Wise has currently launched Assets personal and business for customers in the United Kingdom but plans to roll the product out to Europe in the future.
The problem is, it can be quite hard for small businesses to get external funds since most traditional lenders are reluctant to invest in them. Because, unlike large companies, they don’t have the equity and resources to compete in the market. But thanks to the emergence of fintech or financial technology in the last decade. With fintech developments, small businesses have more opportunities to scale up and thrive by making financing from lenders more available to them.
Trustworthy lenders can help you with this matter. To further understand its impact, find out below how it expands the financing options of small business owners.
Develop New Approaches For Credit Analysis
Most conventional lenders like banks and credit unions heavily rely on the old credit scoring system when making lending decisions. As a result, small businesses with a limited or no credit history find it too difficult to get loan approval. But fintech has made it possible to expand credit availability by developing new approaches in assessing creditworthiness.
Through machine learning technologies, lenders have a pool of data to support their decision-making. Factors like financial situation, spending habits, and professional background are analysed by the machine to come up with the applicant’s behavioural profile. This gives small business owners more chances to prove their creditworthiness towards the lender.
Simplify Loan Application Process
Small businesses are often viewed by banks and credit unions as risky borrowers. It’s one of the main reasons why they usually require multiple in-person interactions before approving their loan. Plus most of them used manual and paper-based loan approval that normally takes several weeks and even months.
On most occasions, such a lengthy process results in a low approval percentage for small business loan applications. Fortunately, fintech provides easy-to-use online applications, allowing small business owners to apply for loans at their convenience and get faster approval. With rapid loan underwriting, small businesses can navigate and understand their financing options much better.
Provide Credit Directly
Drawn-out application processes and high fees have held back many small businesses from securing short-term loans. Such limitations are impacting the cash flow of thousands of companies. But the need of small business owners to access fast credit is largely recognised by fintech.
With fintech’s advanced loan origination software, online lenders that offer quick cash loans, bad credit payday loans, emergency loans, etc. don't only improve their credit assessments but the process of their loan disbursal as well. They can already provide loans to small business owners using direct money transfers and enforce repayment terms through an online platform.
Create Alternative Forms Of Financing
The fintech industry has undoubtedly provided multiple ways for small business owners to grow and expand. With better automation, speed, precision, and the possibility of lower interest rates, it brings various lending solutions to small businesses and even startups. Below are some alternative forms of financing they have created.
Peer-To-Peer (P2P) Lending
P2P lending is a painless way to get financing with quick disbursals and easy repayment methods. Through automated algorithm-based pricing and underwriting, P2P lending platforms screen all types of borrowers more accurately and match them with the most suitable lender. So even with shorter credit histories and lower scores, small businesses can secure financing.
Invoice Factoring
With accrued late payments, the working capital of small businesses might take a hit. But fintech has made a way to invoice financing technologies to help increase the liquidity of companies suffering from late-payment problems. With a web-based portal, small business owners can get advances from an invoice finance company. They can upload their invoices in real-time and have the amount deposited in their bank account.
Merchant Cash Advance
Small businesses can also get an advanced lump sum of money based on their future credit card sales. They can repay the advance by taking a fixed percentage of those sales until the whole amount is paid back in full. With fintech streamlining the process of credit assessments and setting up dynamic repayment schedules, small businesses can keep their margins and profits still intact.
CrowdFunding
With fintech innovation, multiple crowdfunding platforms allow entrepreneurs to fund their small businesses through a variety of people who want to get involved with their business campaigns. Depending on the type of crowdfunding, small businesses may have to repay the fund or compensate in the form of equity. But besides raising funds, the best part about crowdfunding platforms is giving entrepreneurs opportunities to reach out to potential customers.
Leverage Fintech Innovation To Grow Your Business
Fintech development doesn’t solely make outside financing more accessible to small businesses. It can also help you manage all your financial needs and transactions more efficiently from online lending to accounting and invoicing. You can have an edge over your competitors by leveraging fintech innovation in your daily business transactions and operations.
