Fintech (Finance and Technology) has created a major impact in the financial sectors, from leveraging some of the latest innovations such as Artificial Intelligence, Robotics, Biometric applications, Blockchain, Peer-to-Peer lending, and so on. If Fintech has created a bigger revolution in the financial sectors, then there will be subsequent opportunities to seize the market. To get the similar opportunities, some of the start-up companies are providing enhanced options such as PayPal, GoldMoney, and Alipay.
To elaborate more on the options, for example, PayPal, customers can send and accept money in all types of currencies. The additional benefit of PayPal is that customers can also convert the foreign currency to local currency and transfer the converted currency directly to the bank. Currently, the financial sectors using PayPal have grown significantly in all the regions. It is expected that the investments in the FinTech would increase up to $150 Billion across the world.
Apart from FinTech creating revolution in the financial sectors, let us also explore the options, which the financial sectors roll to next ways of innovations.
- Robo advisory — The concept of robo advisory is to provide financially related bits of advice, to reduce human interventions. And these advices are mainly through complex algorithms. The algorithms are carried out through computers and hence, human interventions are not required. Intermediaries played an important role between the investors and the stock market. Sometimes, this also leads to transactions that are not traceable as well as inefficient. Robo advisory helps the investors to access the stock market with value-added services in an easier and transparent manner.
- Alternate lending — Some of the banking industries found that lending funds to small business are not profitable. FinTech has taken an opportunity to provide peer-to-peer lending based on mutual terms and conditions at low-interest rates. This service has become popular with the investors and set to grow in the emerging markets. In some developed countries, the alternate lending services are payday loans, money orders, mortgage loans, refund anticipation loans, car title loans, and so on. Some of the popular alternate lending companies are SpringLeaf financial, Lendmark Financial Services, and Duvera Financial Inc.
- Blockchain — For online transactions, third-party validation is required for all the transactions. Blockchain is one of the technologies that eliminate reconciliation of third party concept and provides additional security. One of the trends that has made Blockchain technology so popular are Bitcoins. Bitcoins are an unregulated currency which can be traded or exchanged in multiple currencies. The future application of blockchain in finance industries will be through cryptocurrencies, which is called Bitcoin Mining. The term Bitcoin Mining refers to a peer-to-peer process to verify bitcoin transaction, which is the payment from one person to another through a decentralized network. Since the blockchain technology and cryptocurrencies are getting popular, many fintech startups have already started to send/store bitcoin and other currencies through digital.
- Digital payments — As smarter payment options are hitting the market, FinTech start-up companies have provided quick and convenient payment modes to the customers. For example, PayPal is a famous digital payment method used popularly in the US. Upon successful registration in PayPal, the process to send and receive money requires only a valid email address. Some of the payment options are already popular in all over the world and soon it is expected that ATM services will become redundant and customers in the developed countries might go for digital payments for all transactions. With the demonetization push in India, we see huge spike in the use mobile payment apps and mobile banking in order to transact cash, and it will reflect in many other emerging countries in the near future as well.
Financial services have to be sustainable and have to be steadily expandable in order to get a steady growth in the market. Due to various reasons, many financial industries have not been in a position to capitalize in many locations across the world. The lack of no service in many locations results in failure of wider business opportunities. It is recommended that the financial industries must also start to invest in the mature market. This is necessary because, by 2030, these mature markets might be equal in terms of growth and business from the faster-growing companies in the market. One of the major benefits of investing in other locations or in mature markets is because of the constant growth. For example, if the revenue in one location is not up to the required level, then the loss can be compensated from the revenue that is emerging in the mature market. Similarly, the same conditions also apply from one geography to another.
In conclusion, the future of the finance industry is bright like a diamond and every year on we will find increasing use of mobile & card payments and sharp reductions in cash transactions. Fintech industries are fostering swift innovations in a short period of time and we are likely to see more advancements in the future to come.