Written by: James Ponds
The marriage of finance and technology has come to be known as fintech, and it's through this merger of power players that people all over the globe have reached another level of access to financial services. Financial systems themselves have been upended by fintech, but businesses across all industries have also experienced a sort of revolution. The future of finance is continually being shaped by the changes in tech, and there are several sectors within the industry where the changes are beneficial.
1. Mobile Access
Though cold hard cash has always been a leading payment form, fintech has made it possible for cashless transactions to take place through mobile banking. Mobile payments are used for just about everything in the market, but tech giants like Google and Apple have created unique systems that prioritize mobile payments. International transfers are possible but without the extreme efficiency and convenience of local ones, but this too will change with time. The Remittance market’s incredible growth is in part, being fueled by mobile payments.
2. Open Banking
The finance industry has long held a tight grip on consumer data, hoping to manipulate the market and seal a particular advantage. This often occurred when competitors would look for access to elements of consumer data but it escalated to where many companies were keeping their own customers from having control over their data. Open banking opportunities are growing, thanks to both the updates to data protection regulations and the partnership between traditional financial institutions and fintech companies.
Fintech companies aren’t always brick-and-mortar establishments. Many operate solely through digital arenas. Digital transactions rely on a number of working elements, whether a 5G charging function or a working internet connection. As the ability to conduct transactions outside of the traditional financial box continues, the general public benefits as well as business owners and stakeholders. When data is leveraged effectively, it can be customized to the consumer need and be more effective in increasing incomes levels, sending on-time payments, lowering debts and providing a wider range of services.
Fintech has created new concerns with the security of an individual’s personal data and increasing occurrences of cybercrime continue to highlight the vulnerability of companies. When security features can’t withstand an attack, companies often resort to ransomware payments to retrieve their information. Rather than continually being a victim of these crimes, biometric solutions are implemented as security measures. Simple user passwords or two-factor identification have gotten an upgrade to biometric markers that are much more difficult to hack. Facial recognition and fingerprint scanning are two key solutions being used.
Fintech has also caused concern with regulatory agencies around the world, and many of the laws and rules in practice are outdated and out of touch with the systems in use. Fintech companies have moved to keep up with the regulatory changes that occur where they operate, but these new rules often come sporadically or only address a partial concern. Regtech works to address the risks of transaction monitoring, identity management, regulatory concerns and reporting. These solutions try to keep financial services compliant with the changing regulations by efficiently and seamlessly identifying areas of concern and addressing them.
In addition to sidelining cash payments, fintech has also created space for cryptocurrency. This is a virtual currency that is incredibly hard to counterfeit and difficult to double spend. The past few years have seen many of the big players in the financial industry adopt cryptocurrency. Paypal, a leading digital financial platform, had made cryptocurrency available for buying and selling to its United States-based users. Through cryptocurrency is a major part of international transactions and bitcoin is a leading digital currency for shipping and customs exchanges, it hasn’t become a serious financial contender for the average individual.
There is some volatility in cryptocurrencies, and many people are still concerned about security and personal protection. However, as fintech companies find solutions to these issues, more people may begin to invest in them. When this happens, you will see a greater number of businesses jump on board and accept cryptocurrencies as forms of payment.
Fintech will continue to alter the face of the financial industry, having an effect on the private sector and business activities as well. So long as the money and data are secure, fintech offers many benefits.