Tech companies lose their glamour

I have been reading with interest an article by Enrique Dans about ‘The Rise and Fall of Technology Companies’, and his analysis of the latest company rankings from Glassdoor, the site that allows employees of companies in the United States to anonymously provide information about their companies. It is the go-to place for job candidates, because they can discover a lot of good info here. From a company’s perspective, what Glassdoor has to say, can potentially attract or put off new talent.

Glassdoor’s 2020 league table is out, and while some people may complain about the way it collects data, one thing is clear this year, technology companies are losing their glamour. You might be surprised to find that both Apple and Google have dropped their positions: indeed, Google isn’t even in the Top 10 companies to work for. Facebook has dropped 16 places and Amazon isn’t even in the Top 100.

The popular perception is that these companies offer such amazing perks in-house that every young person would want to work there. Having said that, Amazon is fast becoming seen as something of a rogue employer that treats its staff, especially those who make sure we all get our orders, as slave labour.

The magic has gone

Dans says that the Glassdoor league table reflects what the media has been saying for some time. That the big tech companies are losing their mythical status. Indeed, when I use the word ‘glamour’ in this context, it is quite appropriate, as the word originally comes from the Scots in the 17th century and meant “a magic spell.” So, you can see why I say they are losing it, and with the consumer as well as the employee.

What happened?

In 2008 after the collapse of the banking sector, new graduates flocked to the tech guys instead of heading to Wall St. Dans, who teaches, states: “everybody wanted to work for the technology companies: I remember all too well the interest my students showed when I invited a senior figure from one of them to a class. Now, my students are often highly critical of the tech companies. Interestingly, it’s the younger students who are most concerned.”

And the concern is about regulating the big tech companies. Facebook has made this a concern, as we have seen over the last few years. But, who or what is replacing the tech companies as the place most people want to work?

According to the Glassdoor data, it’s a very mixed bag, ranging from software companies like Hubspot, to “consultancies, airlines or hamburger chains.” There is no real trend that is discernible as yet, and we may have to wait a couple of years for one to emerge. But right now the tech companies have lost their glamour — perhaps they should look for a fairy to cast a new spell.

What has the Internet of Things changed?

First of all, let me give you a definition of the Internet of Things. Wikipedia describes it thus: “The Internet of Things (IoT) is a system of interrelated computing devices, mechanical and digital machines, objects, animals or people that are provided with unique identifiers (UIDs) and the ability to transfer data over a network without requiring human-to-human or human-to-computer interaction.”

The IoT has a lot of applications, including the smart home and care of the elderly, as well as in healthcare, transport, manufacturing and agriculture, as well as on military battlefields. The ‘smart city’ is another IoT driven creation. Drones are an IoT baby, as are some of the latest artificial organs. The possibilities are seemingly endless, but let’s take a look at some of the areas where it has already had an impact.

Healthcare

The Proteus Pill tracks the influence of each pill taken: the time, the content, and a body’s specific reaction. It allows doctors to discover which medications work, or don’t, with individual patients, making for more accurate prescribing.

Logistics

International courier company DHL uses IoT tools to track and monitor deliveries. It uses sensors to track shipment containers, protect them, and collect data on workers and the adopted tools. In return, the company is more efficient and costs are reduced.

Transport

Virgin Atlantic launched and IoT connection with its Boeing 787 plane to predict possible health and equipment problems and improve flight safety. It shouldn’t be too long before other airlines adopt it.

Agriculture

Drones have great potential in agriculture, and they are the most multifunctional and reliable Internet of Things technologies. In particular, they are capable of taking pictures of huge areas of land, and can analyse soil composition and watering problems, as well as detecting plant diseases. Some believe that the use of IoT in agriculture will be one of its most important uses.

Education

Smart learning is on its way thanks to IoT. From adjusting the space within a university campus to creating a personalized study plan, IoT in combination with AI and machine learning changes the level of satisfaction with learning significantly.

Wildlife Conservation

LionGuardians is an example of IoT at work in nature. Its technology is an open source wildlife tracking collar system designed specifically for saving animals threatened with extinction. Currently being used in southern Kenya, it is hoping to protect and save 2,000 lions left in the area — by tracking their location and sending notifications to coordinators via SMS in case assistance is needed.

Cities

The Smart City is another fascinating use of IoT. Barcelona is already on board with it and has 500 km of optical fibre network, Wi-Fi routed in street lighting, air quality monitoring and water consumption sensors, smart parking and smart waste management. It makes life more comfortable for citizens and more cost effective as well.

The IoT is already changing our world, and it has much further to go.

Will Neobanks Reward Investors?

Venture capital firms have been flocking to invest in neobanks, and they must be hoping that they will see big rewards. Expectations are high, but it appears that some questions are being asked about whether or not the hype around fintech will yield the financial returns that everyone hopes for.

It is true that the neobanks are attracting plenty of customers; N26 and Revolut being two good examples of customer growth. According to Accenture, UK-based digital banks could add 35 million customers over the next year, and they have around 13 million at present. Its data also shows that in the first six months of 2019, the UK neobanks added five million customers, indicating that the sector is picking up momentum this year.

However, there are some challenges remaining. First, the traditional banks still occupy the biggest slice of the market, and then there are the financial regulators like the FCA, which are extremely averse to any finance related institution cutting corners. Plus, as John Detrixhe points out, we have seen that companies in other ‘disrupting’ sectors, Uber and WeWork, have demonstrated that big valuations and intense customer growth are not sure signs of success. He also says that the fintechs need to ask themselves if they will continue to be seen as a niche product, or will customers eventually see them as a one-stop financial service.

Hence, there seems to be some changes happening in fintech investment, with investors looking at fintech tools beyond neobanks that will prove to provide bigger gains. This move is based on the idea that digital banks will never really disrupt the traditional banks.

So, they are looking at fintech software, such as cloud-hosted software and systems that make it easier to sign up for a new account. In other words, there is a belief circulating that the incumbent banks can fend off the newcomers by adopting new technology that allows them to offer the same benefits as their digital competitors.

These fintech tools are not as sexy an investment as Revolut say, but they could perform better in the long term, because if the incumbent banks can provide the same service as Revolut, then why would customers switch?

The situation in Europe is different to that in other regions where there are millions of people who are unbanked. Europeans have fewer problems with banking access, but perhaps don’t always have a great customer experience. So there is still plenty of investor enthusiasm in the West. Detrixhe says, “Eighteen of Europe’s biggest fintechs are now valued at more than $1 billion, according to Richard Diffenthal, a partner at Hogan Lovells. Investors are lining up to give them even more money.”

The one advantage that neobanks have over the traditional banks is that the incumbents can’t just rip up their legacy and start afresh. They are having to implement change one small step at a time, and that will take time. The neobanks need to use this opportunity, i.e. the incumbent banks slow-moving change, to accelerate their position as a trustworthy alternative to the banks that have been trading for hundreds of years. Then they will provide the returns that make investors happy.

5 fintech trends for 2020

As we approach the end of 2019 it’s the time of year when sector pundits start to look at trends for 2020. You’ll find these within nearly every imaginable product group, and fintech is no different. This year, as in mnay others, the trends are identified at the major conferences, such as Money 20/20, which took place in Las Vegas in October.

1. Product bundling

Fintech startups have typically released single products. Transferwise is an example. As a result, what a bank offered had been ‘unbundled’ by the fintechs. Now there is a move to rebundling products to provide a one-stop experience, but it’s still early days.

2. An holistic experience

Fintechs were initially about financial inclusion and affordable options, but now there is a move towards creating an holistic customer experience that focuses on financial health. Financial health is becoming more vertically focused. This trend includes companies that target specific demographics (e.g. seniors or kids), job categories (e.g. gig economy) and industries (e.g. dental practices).

3. A more global vision

US-based conferences in the past tended to focus on the domestic market, but this year has seen attendees arrive from around the major world regions. It forces the Americans to think more globally and recognise that some of the largest fintechs in the world are global, including the neobanks, such as Nubank in Brazil. We will definitely see an acceleration in the growth of fintech globally, as Asia and Europe are already outperforming North America.

4. More focus on security

Cyber threats are certain to rise, not least because quantum computing is about to come into play and its method of computing will upset the current cryptographic security.

5. From vertical to horizontal

In the beginning fintech startups were vertical, as they travelled alone, so to speak. But the big news is that in the next few years, it will look at horizontal integration as it introduces its innovative ideas to other industries, and also make it possible for non-financial firms like Amazon to offer financial products. It was apparently noticeable that a significant number of C-Suite execs from other industries were at the Las Vegas event.

Of course, fintech is still in its infancy, and we will see many more changes, probably in the not too distant future, as fintech evolves to meet a range of needs worldwide.