Rapid developments in financial technology, or FinTech as it is better known, have disrupted the global financial eco-system to such an extent that it is now nearly unrecognizable from just a few decades ago. While FinTech has steadily been growing ever since the end of the last millennium, the unprecedented boom ever since has not only changed the financial machinations of entities but newer generations have been born to a world where FinTech has taken over most of their daily lives. From “Venmo-ing” each other’s money and seamless online ordering of everything from food to clothes to even cars, FinTech has become so customer-centric that even an ATM seems outdated now, and visiting a physical bank branch to fill out forms is met with dismay.
Even in markets and nations where financial literacy was poor, the Covid-19 pandemic forced banks, businesses, and common people to adapt to FinTech in every way possible. It cannot be denied that 2020 was a turning point in the world of FinTech which has now become something banks and businesses must seriously start looking at in order to simply survive.
Let’s take a look at some global fintech trends which are here to stay for good, and which are expected to make their grand entrance very soon.
Mobile Payments
In the past, payments were done exclusively in cash. Then “civilized society” adopted cheques for enhanced security, and with the advent of debit and credit cards, in-store transactions became so much more convenient in terms of speed. Banks then introduced online banking which allowed people to do their transactions from the comfort of their own homes. However, as it became increasingly clear that the mobile phone was a staple of everyone’s life – something they carried with them at all times – the world of payments shifted completely to mobile phone platforms. Initially introduced by mobile-responsive websites and mobile apps that allowed customers to do all their transactions online, banks took it a step further by allowing you to make payments with just a swipe of your phone.
NFC Payments
NFC payments are contactless payments that use a technology called Near Field Communications (NFC) to facilitate data transfer between a payment reader and a payment device (e.g. an NFC reader and smartphones with e-wallets) in close proximity to each other. FinTech utilized this technology to allow people to transfer money between two devices simply by being close to each other. Not only are these payments contactless but they are also encrypted and highly secure.
We can expect to see far more advanced methods of mobile payments in the near future.
Digital Currencies
While digital currencies and cryptocurrencies have been around for a while, it was only when Bitcoin exploded into the market back in 2009 that the world started looking at it as an actual, real-world currency alternative. Cryptocurrencies utilize a technology called Blockchain to allow extreme levels of security in transactions and data storage, which was previously the biggest deterrent to the wide adaptability of digital currencies in the past. The main benefits afforded by cryptocurrency are its decentralization (there is no one location of data storage which makes it less easy to compromise) and the fact that no one entity owns it. It is also independent of any nation which makes it insensitive to economic or socio-political impacts. As long as people on the internet are willing to buy it and accept its value, cryptocurrency will always have a stable value. Cryptocurrencies are touted to become the currency of the future and millions of people around the world are investing their money in various cryptocurrencies.
Some of the most famous cryptocurrencies include:
- Bitcoin
- Ethereum
- Dogecoin
- Tether
- Binance Coin
Online Lending
Online money lending is another industry that has taken off in recent times. Whereas the only two alternatives for borrowing money from an external party were either from a bank or from a shady loan shark, nowadays many small but trustworthy entities have popped up which offer a wide plethora of online loans sri lanka and services. These companies utilize the power and widespread reach of the internet and smartphones to allow people to apply for and receive, loans without needing to ever leave their seats. Companies like OnCredit.lk offer unsecured loans through online and mobile platforms to allow people to apply for online loans with minimal documentation and an approval time of just a few hours.
Some of the benefits of online loans are as follows.
Quick Lending
Due to being almost exclusively internet-based, people can apply for loans using their mobile device or a computer. The entire transaction from application to receiving the money takes a maximum of just a few hours.
Convenient Application
The application process for online loans is designed to be quick, easy, and simple. Requiring minimal documentation (often just a copy of a state-issued ID and a photograph of yourself) and with just a few simple steps, even the most tech-illiterate person or a first-time borrower would not face any difficulties
Secure Transactions
As transactions happen online, most service providers focus almost entirely on data security. Using encryption and other cybersecurity technologies, customers can rest assured that their data and privacy will never fall into the wrong hands.
The sheer convenience of this system meant that online lending services became extremely popular among social circles that weren’t catered to by banks. Poor people and those who didn’t have access to banks were able to borrow money easily. However, the price of the convenience afforded by online lending is usually high-interest rates and other service charges which, unfortunately, most customers don’t take the time to learn about prior to agreeing to the terms and conditions. Due to this reason, online lending has received a bad reputation as a debt trap.
Virtual Banks
With more and more banking transactions being digitized, the need for physical bank branches is slowly reducing. Indeed, it is from the banks’ sides that in-person meetings are required for activities like account opening, cash withdrawal, or deposit; most customers would prefer if all banking activities occur exclusively online. In the future, we can expect to see innovative people take advantage of the market demand to open Virtual Banks which have no physical presence but exist only on the internet. Customers can enjoy not only the convenience but also benefits such as reduced bank charges due to lesser overhead costs from not having physical premises and related expenses.
FinTech is changing at such a rapid pace that the next step cannot be so easily predicted, oftentimes skipping a few steps altogether in their advancements. It is important to keep yourself updated on the latest tech innovations to avoid losing out on the benefits of early adoption and ultimately, being completely left behind.
