Fintech — shorthand for financial technology — has seen exponential growth in the last year. As many as six data-driven startups achieved “unicorn” status with values over $1 billion, and the industry raised a collective $31 billion in funding. With nothing to suggest their popularity will wane in 2018, their continued presence in the financial world is estimated to generate $1,265,788 million in transactions.
Funds like these are a powerful motivator within the industry, so consumers can expect to see fintech services reflected in traditional banking settings sooner rather than later. Here are two fintech features set to disrupt the financial world as you know it.
1. Digital payments
Though Bitcoin — the most notorious cryptocurrency on the planet — receives more daily press than any other example of fintech, mobile wallets are the most widespread application of fintech services yet. Unlike Bitcoin, you don’t need a degree in economics or computer engineering to understand how they work. As long as you have a smartphone, you’re granted access to this innovative new service.
Today, mobile wallets are a convenience used in a limited number of situations. Only some retailers in the US have the POS that can handle these digital payments. The majority still prioritize traditional methods of payment. But soon, experts estimate cash-free stores will grow in numbers, and anyone expecting to participate in this new economy will have to own a mobile wallet.
Multi-billion dollar corporations like Amazon, Apple, and Google have already rolled out their own apps, but so too have smaller fintech startups. Recently, banks like Bank of America and Chase have partnered with fintech companies to provide similar apps to their customers.
2. Mobile services
From depositing a check to applying for a cash loan, the traditional bank model forces customers to visit their local branch to complete day-to-day banking tasks. Unsurprisingly, this method of banking is going out of style. In the Information Age, when people can access almost anything instantly over the Internet, they don’t want to visit physical locations or wait for specific opening hours. They expect to carry out banking tasks online just like any other service.
Innovative fintech services are making that happen by digitizing the banking experience in ways that surpass that of the mobile wallet. Rather than facilitate digital payments, these services bring familiar banking tasks and products online.
A mobile bank like Chime has zero branches in the US, instead relying on an online platform to facilitate checking and savings accounts. Customers can access their accounts to complete common financial tasks like depositing checks or transferring funds at any time, day or night, without needing to visit an ATM or local branch.
Similarly, a company like MoneyKey has an automated platform that processes their online loan applications. They do everything online, from approving applications to depositing these loans electronically. Some lenders, including MoneyKey, have developed an app to create an effortless borrowing experience for their customers. These apps allow customers to track their payday loans at every step of the way.
What once was a small corner of the industry has now grown to represent a powerful force in finances. Fintech is set to challenge the traditional banking model as more consumers expect convenient mobile access to basic financial services. While these fintech trends won’t force every traditional bank to close their doors permanently, the only way they can expect to keep their doors open is by expanding their products and services on a more mobile platform.
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