The Future of Finance Is Online

February 15, 2016

12:11 pm

Thanks to fintech innovations and growth in the use of the mobile technology, today you can send money, make payment, and even manage your wealth online. With a growing number of businesses offering robo-advisor services and mobile trading applications, we can only look forward to a bigger revolution in the finance and investments sector going forward. Finally, Millennials are getting what they always want: control over their money and investment decisions through their mobile phones.

The delivery of financial services is shifting in a fast pace, from the traditional banking halls to a ubiquitous service available to customers from their comfort zones. But that is not the only revolution in the financial space, as peer-to-peer lending is gaining popularity very fast across the globe. In addition, Bitcoin and the cryptocurrency technology is eliminating bureaucracy in money transfer by overriding the need of having a clearing house. All these financial technologies are transforming how we conduct our financial transactions, and they are currently the biggest threat to the commercial and investment banks still stuck to traditional ways.

With robo-advisor services, Millennials can now manage their own investment portfolios without the intermediation of brokers. Financial management advice is delivered to your mobile phone, making you able to take investment decisions without having to walk into an investment bank or call an investment adviser.

With research showing that young investors do not trust investment brokers to make decisions that are in their best interest, this is a good development that gives the investors more control. Moreover, the beauty of online trading applications is that they empower the investor to know exactly how their portfolio is performing at any given time and track their wealth from anywhere.

On the other hand, peer-to-peer lending is picking up very fast. Popular players in the sector including Funding Circle and Zopa have received massive support financially and their users are growing fast. Latest statistics show that they have more than 500,000 users while issuing loans worth over $250 million. According to Lending Club’s IPO filing, the peer to peer lending platforms are tapping into a potential $3.2 trillion credit market.

As an investment avenue for individuals, lending platforms are presenting huge opportunities but leaving up that expectation will be a challenge.  Credibility and security will be the biggest obstacles to overcome but as with any innovation, it gains perfection over time.

Bitcoin is also booming and startups focused on “Bitcoin Wallets” are appearing at a fast pace. Everyone seems to be excited about the ability to transfer funds to any place across the world. The excitement is about freedom in making payments instantly. With these wallet applications, you can transfer funds by just inserting the recipient’s address and the amount of money you want to send them; and by a click of a button, the transaction is done.

This payment processing is faster and easier than the use of credit or debit cards, a feature that has led to some merchants (including Amazon and Subway) to accept it as a means of payment. In addition, the availability of the money transfer services at any time without any interruptions, contrarily to what happens with the traditional banking system.

The growth of Bitcoin is not a short-lived fuss, as big money from Wall Street investors and venture capitalists is following this fintech innovation. It is estimated that about $317 million has been invested in start-ups focused on building bitcoin wallets and their enabling platforms since 2012 and, for example, Goldman Sachs Inc. invested $50 million dollars in a Bitcoin startup called Circle.

Fears prevail about the volatility in the value of Bitcoin, but as the market matures and more people start adopting the use of Bitcoin globally, normalization will soon be achieved. Another big threat is the possible use of this cryptocurrency in illegal trade and facilitation of criminal transactions. However, as it becomes popular and more people adopt it, governments will be forced to have ways of regulating it probably through cyber crime policies and regulations.

More good news come from the fact that even in developing countries significant steps are being made in terms of these fintech innovations. Countries like Kenya is are already enjoying the convenience of the first ever successful mobile money transfer called Mpesa,which was introduced by Vodafone back in 2007 through its Kenyan telecom company Safaricom. According to data from the World Bank, over 2.5 billion people across the world lack access to credit facilities and other basic financial services. With the reality of fintech growing around the world and particularly in these developing countries, financial inclusion is set to be an important impact of fintech innovation as well.


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25 y/o, born and living in Portugal. Majored in Biology, but tech and computers were always a passion. Wrote for sites like Windows.Appstorm and MakeTechEasier.

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