Edtech is the next fintech

By David Bainbridge for TC

Fintech is a factor of the fourth industrial revolution that has completely taken the world by storm and forever revolutionized how we bank. But many believe it is still in its infancy, with figures suggesting the same: global investment peaked at $5.3 billion in the first quarter of this year — a whopping 67 percent over the same period last year.

So why the screaming surge to success? Fintech startups identified a shift in society, one led by a hungry consumer demand for innovative and digital services. In fact, recent studies showed more than one-third of us would leave our bank if they didn’t offer the most up-to-date technology.

It’s simple — we want things made easy, more accessible and provided instantly. The founding fathers of fintech recognized this expectation and took the traditional concepts of financial services, added a pinch of innovation and a touch of technology and watched the future of banking change forever.

And boy did venture capitalists take notice. In the U.K. and Ireland alone, fintech startups raised more than £461.3 million from investors between 2008 and 2013. And now we can pay with a wave of a mobile phone, transfer funds by speaking into a watch and almost never need cash.

So what’s next? While the fintech bubble shows no signs of popping just yet, it has begun to show signs of the speed wobbles as turbulent motions of the current global economic climate tests its stability.

As the world tries to make sense of economic tremors from the Brexit fallout, upcoming U.S. elections and volatile European financial markets, it’s easy to see why investors are becoming less willing to roll the dice and throw money at oversaturated venture markets. This presents a window of opportunity for investors trying to spot, catch and ride the wave of the next “fintech.”

Enter edtech — 2017’s big, untapped and safe investor opportunity.

Roll-call for investors

The education market is big. We’re talking $5-trillion-globally-per-annum big. Yet edtech has been completely overshadowed by other red-hot investment opportunities, not only from the fintech industry, but others. For example, in 2015, more was invested in Uber alone than the entire edtech industry.

But now the cat is out of the bag. The rise of a new education and learning world has begun with investment in edtech set to reach $252 million globally by 2020. Just as digitalization has transformed the financial services industry, it too will soon have its progressive grip wrapped around education.

For the past 150 years or so, most learning models — especially regarding children — have barely changed: A teacher or lecturer stands at the front of the classroom explaining ideas or introducing facts while students sit and listen with the learning materials being mostly physical textbooks or printouts.

Edtech is poised to be the biggest and possibly most profitable digitalized sector yet.

Now, however, digital technologies are starting to transform today’s classrooms. More students are using computers or tablets, and teachers are increasingly using screens to illustrate aspects of their lessons. Physical textbooks are being replaced by online, interactive services that are more up-to-date and in-depth, which allows learners to explore and learn at their own pace.

This is important because of two contributing factors. First, students are born with digital DNA. When considered like a business, education institutions need to cater to the digital demand of their consumers — people who are constantly exposed to digital technologies outside of the classroom have come to expect the same digital capabilities within the four walls of a learning environment.

Secondly, the world is fast becoming aware of the burgeoning digital skills divide in our society. Digital will soon be the nucleus of every industry. We are already seeing it happen, from human resources to healthcare to fashion. In fact, four years from now, the U.K. is predicted to require 2.3 million digitally skilled workers alone. Are we adequately preparing our young people for such a workplace? Many would argue we are not. In fact, only 10 percent of schools offer any kind of computer science class. If we don’t start at school-level exposing learners to technology existing outside the classroom, the skills gap will soon be a valley that cannot be bridged.

Edtech is the next fintech

Other than being the only technology industry to have direct access to schools, colleges and universities, edtech is also the safest bet for investors. Unlike the ups and downs of the financial markets, edtech remains constant, sheltered from many of the pressures of the broader geopolitical landscape. It is somewhat of a safe haven for smart money from smart investors.

But this is just the tip of the iceberg. The opportunities edtech promises the world’s largest content providers, the biggest educational institutions and any investor looking for a “sure thing” are almost endless. While it might be slightly late to the “digital-first” party, edtech is poised to be the biggest and possibly most profitable digitalized sector yet.