On the back of a record-breaking year for technology firms hoping to disrupt the finance sector, we look at what 2018 might bring. From predictions around the sector’s growth to its increasing impact on small business.

Financial technology firms have been challenging the traditional banking model for some time now – by offering services ranging from mobile payment apps to digital currencies like bitcoin. Regarded by the government as a key source of growth, here’s where we see fintech headed this year.

Riding a record-breaking year  

Despite Brexit, the UK has remained the financial technology hub of Europe. A recent study revealed that more than £430 million had been invested in home-grown fintech companies in the first half of 2017, a 37% increase on investment during the same period in 2016. It’s also worth noting that over half of this funding (54%) came from outside the UK. And, by the close of the year, experts and commentators were hailing 2017 as a record-breaking year for the sector – with venture capital investment doubling since 2016 to reach in excess of £825 million, based on research commissioned by the London Mayor’s office in October.

Potential to boost adoption rates  

Despite these investment figures, UK consumers have adopted fintech on a smaller scale than countries such as the US. People are slowly waking up to the future of fintech – 43% would consider sourcing a personal loan from a fintech provider, and 39% are happy to choose a fintech provider for a mortgage  – but it seems peer-to-peer platforms continues (for now at least) are the favoured choice within the business loans market.

This could all change, however, as open banking comes to the UK. This means that, as of January 13, Britain’s nine largest banks – Barclays, Lloyds, Santander, Danske, HSBC, RBS, Bank of Ireland, Nationwide and AIBG – will be required to make customer account data available to approved rivals. It’s expected that this move has the potential to revolutionise banking, and promote competition between fintech businesses (and challenger banks) and a few of the long-established giants of the financial services industry.

The sector and SMEs

There are significant advantages to exploring the fintech route when looking to finance as an SME. Digital transactions have significantly impacted the ways in which SMEs operate, and the offer of alternative finance from some fintech firms – for example, GapCap – could bring about a shift in SME’s financial approach.

As small business owners increasingly look for more flexible and short-term options when it comes securing finance to scale-up, it seems that these firms could have the edge over traditional banks.

GapCap’s fintech platform gives businesses easy access to cash within 48 hours, as and when they need and without any contractual obligations. Compare that to a bank loan – that requires a form of security from the assets of your company in addition to a personal guarantee from the business owner – or an angel investor who might be willing to purchase shares in your company but will dilute your ownership as a result.

Check out our blog on the importance of company culture here.