We are experiencing a time of unparalleled change within the financial services industry, predominantly driven by fintech.
Financial technology, or fintech, is reshaping and redefining the industry, as it undergoes a time of fast global growth. In short, this so-called fintech revolution is turning the conventional approach to financial technology on its head.
Indeed, between 2005 and 2016, global fintech funding skyrocketed from $5.5 billion to $78.6 billion, with this figure set to rise exponentially in the short-term.
Fintech is everywhere, making waves throughout consumer finance and everyday business transactions, far beyond the traditional world of technology. The increasing importance of fintech, which provides the essential components of accessibility, speed and convenience within the execution of financial services, can be seen on a global scale.
One prominent example of the way in which fintech has totally revolutionized conventional banking activities is mobile banking apps.
Yes. Our money has gone mobile.
Looking at the stats of the number of millennials using mobile banking in the United States from 2014, forecast until 2019 – a considerable 73.1 percent used banking apps on their smartphones three years ago, with this figure set to rise to a massive 94.2 percent by 2019.
These figures show how mobile banking plays a large, essential part of everyday life, and the shift in banking habits of millennials who now expect constant access to their funds, 24/7, wherever they are in the world.
Following the changes we saw with the initial boom of the "dot-com era," daily banking activities are now within easy reach via the ultra-convenience of mobile apps.
Also playing their part in this immense upheaval of the financial services industry, as well as mobile banking apps, are roboadvisers, peer-to-peer lending, crowdfunding and cryptocurrencies such as bitcoin.
Possibly a key driver for this epic fintech revolution stems from the 2007-2008 financial crisis. Whilst financial services providers were focusing on the fall-out from the crash, and subsequently adapting to the changes to the regulatory landscape, developments in fintech were quite far down their list of priorities.
Some of the most pioneering technological innovations were storming into play, which have, in effect, changed our lives. Some of the world’s major players, using Amazon as an example, went from not making a profit to becoming one of the world’s leading online retailers thanks to the growth and development of fintech.
Similarly, fintech firms are filling the void between the offerings by traditional financial services companies and what consumers now expect and demand to simplify their daily lives.
That said, despite the old adage of "we don’t like change," as such a shift in tendencies can be somewhat unnerving for some, particularly in relation to their finances, advances in fintech trends are happening at an extraordinary speed.
Indeed, thanks to fintech, the customer experience has been enhanced like never before.
Individuals can access their finances, make transactions, send money transfers and report stolen cards, all from their smartphone. All in a matter of seconds. Long queues, conforming to traditional banking hours or phoning central bank helplines from abroad are no more. Your bank is in your pocket. All the time.
In addition, another significant advantage to this surge in fintech is that is allows access to financial services to millions of people who may live in remote areas. As an example, funds can be sent to family and friends overseas who rely on income from elsewhere.
Also, fintech goes against the conventional prejudices of some financial companies, who refuse to deal with clients who do not fit their high-net-worth bill. Fintech can provide financial advice to these people and businesses, helping them to save and invest.
Firms also benefit from fintech as it means they can lower costs, diversify and meet ever-changing client demands, working towards forging strong business relationships.
As we look to the future, we’ll no doubt see challenges to fintech, as we see within any sector. That said, this global rise in fintech makes for a far better-connected world, offering people the ability to manage their finances efficiently and extremely quickly, and move towards reaching, perhaps even exceeding, their financial ambitions.
Nigel Green is founder and CEO of deVere Group. One of the world’s largest independent financial advisory organizations, de Vere does business in 100 countries and has more than $12 billion under advisement.
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