Today’s financial world looks a lot different from the one from just a few decades ago. The mixture of change in financial rules, increased demand for financial products and service, and technological improvements have all created a lot of room for financial technology to grow. FinTech has already revolutionized the world of finances and it looks like blockchain and cryptocurrencies will do so even more. The biggest question is how exactly FinTech and crypto will affect financial services. Let’s dive into it a bit deeper.
FinTech’s Expanding Horizons
Before we move on, let’s take a closer look at how FinTech has already changed financial services. Not so long ago, financial services institutions offered a wide variety of services under a single umbrella. These services include everything from traditional banking services to mortgages and trading. With the rise of technology, more room was left for smaller companies to unbundle those services and come up with individual offers. The reason it worked was that this strategy allowed them to be more efficient. If you take a look at financial services right now, you’ll see that there are more and more companies offering untraditional services. Just take a glance at some of the popular mobile-only stock trading apps and peer-to-peer lending sites and you’ll get the idea. As a result, banks and other traditional companies offering financial services invested heavily into becoming more like those companies. This is why some banks now offer consumer lending platforms and similar services.
The Rise of Blockchain
Perhaps the biggest impact of all financial technologies was made by blockchain. It was this tech that birthed digital currencies and helped them get where they are today. What many people fail to understand is that cryptocurrencies aren’t just another type of currency available at the moment. Crypto comes with a number of benefits and it’s no surprise they’ve made so much noise ever since they were first introduced. What everyone loves about digital currencies is that there’s no governing body behind them. In other words, no one has access to your personal information when shopping with digital currencies. Not only this but these currencies also eliminate the need for third-party services, which is a huge deal. With no third-parties involved, you don’t have to worry about any additional fees when paying with digital currencies. What’s more, crypto transactions take place in a more timely fashion. With that said, it’s obvious why blockchain has had such a huge impact on the financial services and financial world in general.
What is BlockChain & How It Benefits The Banks & Finance Industry
Giving Customers What They Want
If you’re looking for a reason why FinTech and crypto have caused so much change in the financial world, the answer is quite simple. Financial technology is all about giving customers what they want and their emergence was always going to result in huge popularity. For example, with over 3.5 billion smartphone users across the world, it was obvious that people will want to be able to make payments on mobile. As soon as companies that offered this service emerged, they’ve shaken the entire financial services sector.
Crypto and mobile go hand in hand, and now, many smartphone users have crypto wallets in their devices. Another thing FinTech does is encourage people to take charge of their finances. Why just pay for stuff on your devices when you can manage your finances the same way? We now have apps that provide one-click loans and immediate money transfers overseas. There are more and more personalized apps available and we can only imagine where they’ll take money-management in the future.
The Effect On The World Of Trading
You can’t talk about finances without mentioning the world of trading. All new financial technologies, including blockchain, have a huge impact on traders and companies in the trading sector. It’s no surprise that the recent technological advancements have created even more room for traders to operate in. Just a few decades ago, if you wanted to trade, it would take countless phone calls just to make a single transaction. Now, there are trading apps and you can make your move on a mobile device while commuting to work. With so many possibilities, the number of traders continues to increase and trading has taken an entirely new form. With so many traders out there, understanding market psychology and keeping up with trends has never been more important. Financial technology has also created more opportunities for trading. With the emergence of blockchain and cryptocurrencies, came cryptocurrency traders. Moreover, companies offering cryptocurrency trading services have started to appear.
The Internet As The Global Marketplace
Ever since the internet was first introduced, it brought massive changes to our everyday lives. Nowadays, almost everyone shops online and quite often, online transactions take place between people from different parts of the world. As if that’s not enough, the web has opened up new markets and increased the need for new financial solutions. For example, just take a look at the world of online gaming. Gaming-industry giants offer services to players across the globe. Many of their games include micro-transactions and users want those transactions to be as simple as possible. With the rise of crypto, we might get to see customers in sectors such as online gaming switch to some of the new solutions available. The reasons behind it are numerous. For instance, you don’t have to use personal information when paying with digital currencies online. As long as you have your wallet ID, you’re good to go. With more and more companies targeting worldwide audiences, expect these payment solutions to grow in popularity even more.
Also Read: Future Possibilities of Artificial Intelligence Technology & Applicability
The Rise Of Chatbots And AI
Not all financial technological advancements have had a negative impact on companies offering traditional financial service. In fact, some of the most recent techs have helped these companies take their operations to the next level. Artificial intelligence has been a widely discussed topic for quite a while. AI may still not be where the experts want but it has already made some huge changes in the way these companies work. For example, let’s look at the chatbot feature. If you’ve ever accessed a site owned by a financial company, chances are you saw, or even talked to a chatbot. What these things do is make it easier for customers to contact them and get the information they want. With chatbots in their arsenal, they can offer better service and reduce their expenses. In addition, financial services companies can adopt AI technology to make their internal operations both more efficient and more secure. According to some estimates, AI can already reduce manual effort by approximately 50 percent. With AI technology constantly improving, this number will grow even more.
Crowdfunding and Crypto Crowdfunding
Anyone who has been online for the past decade or so has heard a lot about crowdfunding. There are companies out there that have been completely funded by other people online. Obviously, without financial technology, something like this would be entirely impossible. Still, FinTech has grown so much and things like crowdfunding have become a large part of the financial world. In fact, if you browse the web for crowdfunding websites, you’ll see that there are more and more of these becoming available every day. With the emergence of digital currencies, crypto crowdfunding websites appeared. FinTech and crypto worked together to create an entire new market in the financial services sector and we’ll see even more from them in the future. Less traditional financial services companies will continue to grow and come up with ways to make funding possible.
What’s Next For FinTech and Crypto?
Overall, the future looks bright for financial technologies. The changes FinTech has brought have turned out to be extremely significant and new FinTech companies will need even more new tech in the future. It’s expected that these companies will work on creating new and improved technologies that’ll allow them to offer new services. This is especially the case in under-banked markets where new solutions are necessary. The good news for them is that technology doesn’t look like it’ll stop evolving any time soon and creating these new solutions won’t be as tough as it seems.
Also Read: Corona Virus Spread And Its Economic Fallout – Prof Arun Kumar
Some of the latest innovations such as blockchain and crypto will continue to grow and reshape the financial services sector. The launch of Bitcoin and other cryptocurrencies may have even marked the beginning of the transition to a cashless society. There’s no doubt digital currencies will constantly gain more popularity and their role in the financial world will increase. We may even get to see some new giants like Bitcoin emerge in the next few years.
The Bottom Line
All in all, it’s undeniable that technology has a huge effect on the world of finances. Just the changes we got a chance to see in the past few decades have completely turned the financial services sector around. With the pace technology has been advancing at, we can only imagine what kind of advancements we’ll get to witness in the future.
