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A modern world requires a modern financial service. The efficiency and convenience of customer-facing systems in recent years has reflected the times in which we live. Perhaps nowhere is the more acutely felt than in the rise of fintech. The increased use of the internet on hand-held devices alongside the development of ground-breaking software has given birth to financial technology that is advanced enough to change the way we use money for good.
The fact that up until recently ATMs and local branches were the main sources for all banking transactions seems surreal. The rise of fintech has come in such a surge that it feels as though it has always been there. Great technology always appears as though it was destined to be invented (for example the mobile phone) and that is the case with one particular branch of fintech: mobile banking. It’s a fair assumption to say that anybody that is able to effectively use a smartphone is using mobile banking. The ability to manage your account, make transactions and view your transaction history from anywhere you choose, has almost eradicated traditional banking methods. In the future, this trend is likely to replace any local bank branches into robo-banks, where bank clerks are replaced by automated A.I. systems.
The shift away from traditional banks is leading to a rise of fintech start-ups. This movement is clearly reflected by the success of established models, such as PayPal. This American company has already changed the financial sector by holding more money than all American banks, aside from twenty larger groups. The main attraction to systems like PayPal is the revolutionary level of flexibility that it brought to payment and processing. This has led to a snowball effect in the finance sector which has seen a rapid increase in fintech start-ups all looking to tap into a market adopting these changes. If you consider that the number of funding rounds worth more than $100 million has gone from ten in 2014, to 52 last year, the rise is astounding. Whether fintech start-ups eventually take over the financial sector is up for debate, but what is for sure is that there will be a monumental swing from bank users to fintech users in coming years.
The fact that the world has been so willing to accept the newer digital technologies of fintech, has led to something which may have before seemed impossible, the birth of digital currency. Bitcoin and other cryptocurrencies have taken the world by storm. There isn’t a financial website, newspaper or newsletter in the world that isn’t mentioning cryptocurrency on at least a weekly basis. Whilst the stability of these monetary tokens is still a hotly discussed topic in the financial sector, there is no doubt that it has the potential to change the world. This might seem like hyperbole, well consider this: the initial price of bitcoin in 2010 was set at less than a penny, today it is worth almost £10,000. That makes bitcoin one of the fastest rising currencies ever, and this has not gone unnoticed. Some of the biggest companies in the world are facilitating and investing in bitcoin, these include the likes of Expedia, Dell, Tesla and Microsoft. What bitcoin presents to the world is an opportunity to create a system which is far harder to corrupt and defraud than any other we’ve ever seen. The correlative rise of bitcoin alongside systems such as blockchain allows for a cheaper, more efficient and safer way to conduct transactions, especially when it comes to businesses. However, projects such as FB Coin from Facebook are stretching the parameters of cryptocurrency even further by turning to face the mass market. Critics of cryptocurrency highlight its unpredictability and instability as reasons to be wary of this nee fintech development, but almost all of the signs seem to suggest that it could become more widely used than ever imagined.
The incredible rise of fintech reflects the increasing demands of our modern world. As the technology which facilitates improved banking methods continues to advance, the limits of fintech’s capabilities will remain unknown. However, what we can say with some level of confidence is that it has already changed the way we use our money. The number of mobile banking users and companies investing in developing this sector proves that there is at least, a drive for even more financial changes in the future.
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