Why EdTech is the new FinTech — and How to Capitalize on the Trend

Investors are always looking for the next hot thing and until recently, financial technology “FinTech,” was considered by venture capitalists as the promise land. FinTech is an industry composed of companies that use new technology and innovation with available resources in order to compete in the marketplace of traditional financial institutions and intermediaries in the delivery of financial services.

Global investment in FinTech ventures in the first quarter of 2016 reached $5.3 billion, a 67% increase over the same period last year, and the percentage of investments going to FinTech companies in Europe and Asia-Pacific nearly doubled to 62%.

As this TechCrunch article suggests there is currently new developments coming that will position EdTech as the new FinTech and we couldn’t be more excited about it. “Edtech is poised to be the biggest and possibly most profitable digitalized sector yet,” says TechCrunch.

The global EdTech market will grow 17% per annum to $252 billion by 2020, according to a report from EdTechXGlobal and IBIS Capital.

So what is driving these impressive numbers? The answer is Disruptive Innovation.

A Disruptive Innovation is an innovation that creates a new market and value network and eventually disrupts an existing market and value network, displacing established market leading firms, products and alliances. The term was defined and phenomenon analyzed by Clayton M. Christensen beginning in 1995, according to Wikipedia.

A great example of Disruptive Innovation is digital photography. Before digital photography, the leading technology was chemical photography.

Kodak was the world leader in the chemical photography market. It once had 140,000 employees and its market value was $28 billion. It invented the digital camera but did not allow this invention to grow.

In 2011 Kodak went bankrupt. Instagram, which was established on 2010 was purchased by Facebook in 2012 for one billion dollars with 13 employees. Instagram developed a digital photography platform that disrupted the industry. Its platform was Disruptive Innovation that replaced the old platform for sharing photographs.

This is exactly what Ed-Tech is about to do in the education world. The education market is estimated to be $5 trillion globally per annum.

However, most of it is done in a model that is called “sage on the stage.” In this model, 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. It is 200 years old model that was created in the industrial revolution era.

In the 21st century this “sage on the stage” model is not working anymore. The best catalyst for change is going to be Ed-Tech. Today 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.

Disruptive Ed-Tech models such as flipped classroom or social distance learning start to transform the current conservative models. Soon we are going to see innovative models and solutions that are going to replace the current ones while creating innovative, attractive business models.

In short, Ed-Tech is the next big thing and your education or corporate training institution needs to pay close attention or unfortunately get left behind. To capitalize now start incorporating more Ed-Tech into your business or learning model.

Create data-driven, interactive lessons that easily allows you to measure your learner’s success, like with Time to Know’s Echo. Monitoring the learner’s performance in real-time means you can track and react. Switching up lessons and making sure everyone is getting the best instruction possible.