In the recent past, FinTech has been gaining a lot of traction. Disrupting traditional financial services including mobile payments, loans, money transfers, fundraising, and asset management. The FinTech industry is huge and VC-backed fintech unicorns are worth billions today. This is partly because a number of traditional banks are supporters of the revolutionary technology which is why they actively invest in and partner with fintech startups and companies. Through the widespread applications of FinTech, the traditional way of handling financial transaction has been revolutionised. This is why $111.8 billion were invested in Fintech companies in 2018 only.
The newest advances in FinTech are utilizing machine learning programs, artificial intelligence, deep learning, blockchain and data science to run hedge funds, process credit cards and much more.
Areas Where FinTech Had the Biggest Impact
- Mobile Banking
Mobile banking is becoming remarkably common in today’s digital era and it’s all because of the innovations in FinTech. Consumers want access to their personal finance anywhere in the world 24/7 on their smartphones. Almost all the major banks offer mobile banking apps for their consumers and mobile payments are continuously becoming common with the global mobile payment market on track to surpass $1 trillion in 2019.
Neobanks have also gained traction with the rise of FinTech. Neobanks are essentially banks without any physical branch locations providing financial services through entirely mobile and digital infrastructure. In the first nine months of 2019, venture capitalists poured $2.9 billion into neobanks, compared with $2.3 billion in all of 2018.
- Crowdfunding
Capital raising aims to provide customers with access to financial investments in exchange for either equity or return of interest rates. Capital raising can be divided into crowdfunding and alternative financing. To help existing companies or startups to raise capitals for business purposes is done through crowdfunding. Crowdfunding is a relatively new sector of fintech as it emerged in the digital era. The crowdfunding market equals the range of $184 million to $1.59 billion. In the next 10 years, crowdfunding is expected to hit $1 trillion.
- Peer-to-peer Lenders
Peer-to-peer lending or P2P lending is a system which enables individual investors to lend money to individual borrowers. Currently, P2P lending is leading the way and the market of P2P loans is increasing twice in size. FinTech is improving the process of lending by streamlining risk assessment, making the approval process quicker and ensuring easier access. People from around the world can now apply for a loan on their mobile devices which makes the process of loaning money quite an easy one for consumers.
- Insurance
Insurance is getting revolutionized by the advances in technology and its quickly becoming its own industry called insurtech. Insurtech startups are attracting funding at an increasing rate. Insurance startup Oscar Health secured $165 million in funding in March of last year at a $3.2 billion valuation, according to CNBC. The industry is looking at tons of innovation from mobile car insurance to wearables for health insurance. Through personalized offers and pricing, risk management and data-driven insurance plans, users get an elevated experience.
Future of FinTech
The FinTech industry is growing at a substantial rate and is expected to grow at a compound annual growth rate (CAGR) of 6% making it worth $26.5 trillion by the year 2022. 64% of consumers have used at least one or more FinTech applications in 2019 so far. This increase in FinTech services usage reveals that users now prefer a more digitized experience when it comes to their personal finances.
Traditional banking has been affected by the rise of FinTech but with the passage of time, FinTech has become a part of traditional banking, by incorporating itself in the banking sector and not become a different entity altogether. It is also apparent and factual that without understanding and integrating FinTech, businesses will lag behind. This clearly shows that FinTech is the future and in order to stay at the top of the game, developments in FinTech is the key.
Author-Bio:
Oliver has been a news reporter and editor since 2011. Currently he is a tech journalist at Shufti Pro, an AI-powered identity verification service provider. His educational background in technology and journalism empowers him to cover a wide range of topics including AI, IoT and tech startups. Living in Great Britain, Oliver likes to go on daily walks to grab a cuppa tea.