Fintech is an excellent sector to invest in because of its constant innovation and bright future.
Leaders in global finance have long seen fintech as a powerful driving force capable of transforming whole sectors. According to Goldman Sachs, the global fintech pie is currently worth US$4.7 trillion, with over 12,000 firms in various nations and many more to come.
Because of their rich and tech-savvy consumers, fintech businesses are fast expanding. According to Capgemini study, over half of clients (46 percent) utilise services supplied by three or more fintech businesses; also, 60 percent of financial institutions perceive these companies as possible partners.
Why is this industry thriving? It has made financial access far more accessible to small firms, women, minorities, and immigrants, who previously thought fundraising was practically impossible; in a sense, the technologies have levelled the playing field.
Increasing the security of financial data
Protecting sensitive data is a huge concern for banks and financial organisations. As a result, there are stringent data privacy laws, and banks and financial institutions are always under pressure to be transparent about policy initiatives taken to increase data protection. This is why such businesses invest in fintech: they need to safeguard themselves and their customers against losses caused by hackers.
Aside from security, fintech services guarantee quick transactions, resulting in frictionless cash flow and absolutely seamless financial processes. Encryption and regulated security controls are essential components of a viable cybersecurity plan. As fintech allows organisations to monitor all traffic and limit potential hazards, these methods offer safety from cyber-attacks.
Fintech not only significantly reduces service costs, but it also produces excellent outcomes. All procedures can be automated, and human-in-the-loop computing technologies allow for seamless operation. Fintech firms do not need to squander money on antiquated systems such as call centres.
They already have all of the required information on the customer in case an issue emerges, therefore they are likely to be aware of it in advance, giving fintech businesses a unique capacity to plan ahead of time.
New fintech firms, too, employ multi-channel strategies and the most advanced digital marketing technologies without incurring costly regulatory expenditures. When compared to banks, fintech startups face only 1% of the acquisition expenses.
Blockchain applications in numerous areas
According to the World Economic Forum, the net worth of blockchain is predicted to reach 10% of global GDP by 2027. Approximately 90% of European and American banks are investing in this technology.
Cryptocurrencies account for a sizable portion of the fintech business, with many firms centred on the most prominent blockchain-based currency, Bitcoin. Consumers today need constant control over their finances. A system that cannot be mismatched, is not controlled by the government, and has no fees was unthinkable in the past.
The world of apps
Digital payment is currently the most important product of fintech, accounting for 25% of the whole ecosystem. Because almost all smartphone users make mobile payments, mobile payments alone are likely to surpass the $1 trillion mark in 2020.
There is still a lot of room for expansion. Because of the hefty transaction fees, most American users must forego a portion of their money. On average, a $100 transaction generates $97.30 in profits for retailers. Starbucks decided to attempt a fresh method to changing this problem – their app allows customers to avoid costs by paying with money from their bank account or credit card.
Regulations have been tightened
The more fintech grows, the more governments are concerned about it, and the more laws they are attempting to enforce, particularly with the integration of technology in the financial arena. This has exacerbated regulatory issues for many businesses.
In many circumstances, laws may be detrimental to growth; we can see this in a variety of industries. They’re supposed to make things safer and more manageable, but they also slow things down. However, in the case of fintech, the reverse has occurred, with laws causing a major acceleration in the sector.
The European Union approved the General Data Protection Regulation to limit the amount of personal information that banks have access to. Other countries, such as South Korea and Japan, followed the EU’s lead.
Hopefully, you recognise the potential of fintech as well and will utilise this knowledge to make a wise decision and invest in this fantastic field. Fintech, with its optimistic future, is an excellent approach to maximise the return on your investment.