Somehow, most of us take modern technology for granted. Amazon delivers virtually anything to your doorstep within two days.
The online retailer, Walmart, and other major markets deliver groceries to your front door within hours of ordering. Answers to practically any question are at your fingertips. You can connect with peers and meet new people without leaving your home. Surely, you can think of several other recently-newfound capabilities brought to us by technology.
Fintech, short for financial technology, has also improved many lives. Thanks to fintech, we’ve got more convenience than ever before. Although modern technology has been used for economic purposes for years, the sector is growing rapidly.
While nobody can infallibly predict the future, we’re confident that the following trends will soon become widespread movements in fintech.
Will Banking Become Exclusively Digital?
For several hundred years, financial institutions and bankers have lent money, protected customers’ finances, and advised business owners from brick-and-mortar establishments. Even with the growth of financial technology, banks will continue operating traditional brick-and-mortar branches for decades to come.
You might be surprised to learn that exclusively-digital banks already exist. Countless personal loan providers have opened up shop online in recent years. Although these operations are relatively small, they’ve experienced substantial growth as a collective recently.
According to TransUnion, the American personal loan market was just 5% digital in 2014. As of last year, fintech lenders make up a whopping 38% of the country’s personal loan sector.
The multinational information technology company CACI International predicts that trips to brick-and-mortar banks will fall more than one-third from 2017 to 2022. According to the group’s market research, Americans take just four trips to banks each year.
The COVID-19 pandemic has encouraged countless more financial institutions to offer services online. Even the most traditionally-minded consumers are picking up tablets, smartphones, and computers to meet their banking needs. The generational trend towards buying cryptocurrencies like Bitcoin is one such example.
Blockchains Aren’t Just for Cryptocurrencies
Blockchain technology is sweeping the global financial industry in revolutionary form. The world’s first blockchain was theorized in late 2008 and brought to reality in early 2009 by Satoshi Nakamoto, the pseudonym of the still-unknown founder of Bitcoin. Blockchains, used widely by cryptocurrencies across the globe, are ledgers of transactions that can be accessed by anyone.
Major financial institutions aren’t adopting blockchain technology to open private internal information to the public. Rather, utilizing blockchains can improve the speed of transactions, give customers the ability to reliably track their assets, prevent unauthorized employees and cybercriminals from accessing information, and verify the authenticity of goods.
Keep in mind that most businesses don’t have fully-functioning, top-notch blockchains yet. Overhauling their in-house computer networks is a massive undertaking.
Governments Will Tighten Regulations Related to Financial Technology
Cryptocurrencies, as mentioned above, have existed for over 11 years. Even the world’s most tech-savvy consumers didn’t bite at Bitcoin initially, as most people thought Bitcoin’s only appeal was its novelty. Eventually, however, cryptocurrencies became a mainstream topic.
It’s no secret that governments are reactionary institutions. Now that modern technology has exponentially increased the rate at which things develop, governments are notoriously slow to respond to rapidly-growing issues that involve technology. Many politicians aren’t literate when it comes to smartphones, social media platforms, or the Internet.
The lack of cryptocurrency-related regulations worldwide is one of many examples of government entities’ slow-to-react nature. Due to the numerous exit scams that new cryptocurrencies and crypto-related startups have pulled in recent years, governments have just recently started discussing crypto-related regulations.
Governments around the world are sure to implement a myriad of fintech regulations over the next few years. Digital banking, cryptocurrency, and blockchain will likely be the greatest topics of concern.