In four years FinTech has taken the financial sector by storm, disrupting an industry that had remained unchanged in the UK since the ‘big bang’ under Margaret Thatcher.
EdTech is set to do the same in the world of education, yet is receiving far less attention from the UK investment community and policy makers alike.
Global EdTech investment has more than quadrupled since 2012, and is set to hit $252bn by 2020.
It is one of the UK’s fastest growing industries and accounts for 4% – the same as FinTech – of all digital companies in the UK.
UK schools currently spend over £900m on education technology annually. Considering the relative lack of digitisation (2%), and the growing need for cost efficiencies to be made in this sector, this number can be expected to grow significantly.
However, the education sector operates at a notoriously slow pace – the model of delivery hasn’t changed in over a century. So while digitisation can be expected to happen, the rate of change will be slow in comparison to other sectors such as financial services. Investors expecting a quick win in a similar vein to the FinTech bubble will be disappointed but should take a long-term view as the potential size of the market is vast.
The dissemination of technology in the classroom, developed and provided by private companies, will likely be a contentious issue among the public. Furthermore, the sheer number of gatekeepers in the education sector, including policy makers, local authorities, teachers and, most importantly, parents means that technology used in schools and universities will need to pass through rigorous testing and assurance before implementation can begin.
The procurement process in the private sector will likely have fewer barriers to entry but is a much smaller market – only 7% of UK schools.
The total lack of digitisation in such a highly regulated sector means EdTech will be a long-term investment. Education can eventually be expected to emulate the public-private model seen in healthcare; with technology improving outcomes, providing cost-savings and returns on investment.
Another potential reason why EdTech has not yet experienced the explosive growth of FinTech is the issue of our ‘big data’-illiterate workforce.
For the UK’s digital economy to thrive and reach its lofty projections, plugging the data skills gap must become a priority. Policy makers and corporations need to recognise and embrace the role EdTech will play in doing so, both in the school and employment spheres.
According to TechUK, ‘in order for employers to use the Apprenticeship Levy to reskill existing employees in data analytics, it would require a large commitment from both the employer and the individual trained. The process would take 24 months, and training alone would cost £18,000’. Rather than enrolling employees on costly training courses, employers should look to EdTech apps such as Proversity, Fluency (which is free) and AVADO that provide learning and development courses in digital skills such as analytics, coding, email, CRM, SEO and social media.
In the academic sphere, concessions have been made to address the long term issue of a domestic data talent pipeline (or lack thereof) by introducing compulsory computer science into the curriculum and the establishment of EdTech UK in 2015, a government funded body to promote the sector.
But more needs to be done.
The Department for Education’s strategy, published last year, has no mention of digital transformation in the classroom; an embarrassing fact when America has had an Office for Education Technology for over a year.
Investors should look to the success of the US and Chinese EdTech markets to see the potential of the UK market, and EdTech companies should make their voices heard to the Department for Education.
In a post-Brexit world, upskilling our workforce while making much needed cost savings in the education sector is paramount to retaining our competitive advantage in the global marketplace and harnessing some of the global investment in the EdTech sector.
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