To kick off our focus on Disruptive Innovation, we take a look at the trends that are emerging within fintech, insurtech, proptech and regtech
Technology has facilitated much needed innovation within industries that had previously struggled to keep up.
While digital technologies have continued to evolve, certain industries have had to adapt their cultures to continue innovating successfully. Financial institutions, insurers, real estate companies and regulators have found themselves playing catchup, as skill sets and mindsets have proved insufficient for getting the best out of the cloud, data science, AI and other capabilities. But the emergence of disruptive innovation sectors, namely Fintech, Insurtech, Proptech and Regtech, have enabled companies to leverage digital to keep up with competition.
Many of the use cases present in these industries have been especially prominent during the Covid-19 pandemic, as people have worked remotely, as well as obtaining services from home. Below is a guide to the four emerging sectors of disruptive innovation, which explores how they came about and some of the biggest trends in each space.
Arguably the largest and longest-standing of the four industries in this list, financial technology, or Fintech, dates back to the beginning of credit and debit card usage, which led to the emergence of ATMs. From here, disruptive innovation across financial services has encapsulated multiple trends that are surging to the fore today.
One such trend is the surfacing of online-native banks, such as Monzo and Starling Bank, which have allowed people to securely organise their finances from anywhere. This capability has become even more important as lockdowns have been enforced by governments worldwide during the Covid-19 pandemic.
The sector has also seen a rise in cryptocurrency investment, as well as online marketplaces seeing increasing crypto activity in recent times. Powered by blockchain, much of the appeal of cryptocurrencies has come from its decentralised nature, and there is talk of monetary means such as Bitcoin being used to purchase vehicles, among other mainstream products, in the near future.
According to the Market Data Forecast, the global Fintech market is expected to reach around $305 billion by 2025, growing at a compound rate of around 22.2%. The study cites that the growth of e-commerce will correlate with the continued surge, while companies in the space will look to take advantage of robotic process automation (RPA), chatbots and distributed ledger technology (DLT). What’s more, investors in the Fintechs of the future will be on the lookout for strong leadership and partnerships, as well as more unique USPs.
Believed to have emerged around 2010, Insurtech has brought disruptive innovation to the insurance sector, enabling companies in the industry to sort through customer data quicker, and provide a more efficient and intuitive service. A report from CB Insights revealed that Insurtechs raised $2.1 billion in Q4 2020, and the global market has been valued at $2.72 billion.
The use of automation and the cloud within Insurtech has allowed for the saving of costs, and a continuation of service amidst Covid-19, as offices closed down. While migrating to the cloud has enhanced data strategy and security, AI has allowed insurers to gain relevant customer information more quickly when examining claims, leading to a more seamless consumer experience.
Signs of digital technologies throughout Insurtech evolving have manifested themselves in companies such as Superscript becoming registered brokers for banks such as Lloyd’s, which has led to an expansion of portfolios and customer bases.
Property technology, or Proptech, has been disrupting the real estate space, allowing for the buying, renting and selling of properties online. Like other industries on this list, Proptech companies have been vital for maintaining operations during lockdown as company headquarters closed their doors.
Landlords and homeowners can securely list properties on an online market via a website or app, and in more recent times have been able to upload virtual viewings. Meanwhile, data analytics and algorithms powered by AI have allowed users to see what properties would be best for them. Additionally, platforms such as PlanetRent offer centralised portals for hosting relevant documents and details in one place.
Proptech, and indeed real estate, also encompasses offices, and demand for companies in this area of the sector have been in high demand due to the need for organisations to move to smaller spaces, or leave the office altogether. Here, users can view office listings and make transactions online.
The sector is considered to have initially taken off around the mid-2000’s in the wake of the dot.com boom, and in 2019, its market value reached $10.15 billion.
Emerging in the wake of the introduction of Project Innovate from the Financial Conduct Authority (FCA) in 2014, Regtech, short for regulatory technology, has brought disruptive innovation in the form of easing the process of meeting regulatory requirements. With failures to meet regulations proving costly, organisations have had to spend substantial amounts of time on ensuring compliance. But digital capabilities have made these procedures quicker to implement, while increasing agility.
Regtech enables organisations to enhance processes around meeting regulations, which have constantly evolved globally over the years when it comes to data. Regtech companies have leveraged the cloud, data science and AI in order to facilitate policy management, identity verification and transaction monitoring, among other important operations.
Anti-money laundering, which leverages data science to analyse user behaviours and detect possible anomalies, is also a notable service offered by Regtech firms. This is often aided by machine learning and RPA, which ensure that any suspicious behaviour can be detected at any time, as well as facilitating risk scoring.
Found to have accumulated $4.9 billion in revenue in 2018, the global Regtech market is projected to reach a value of $55.28 billion by 2025.