The fintech revolution is well underway and is set to radically disrupt and transform traditional financial systems.
Yet, as with many other disruptive technologies, fintech has been overlooked and undervalued by many investors and business leaders.
Along with emerging tech trends such as AI, 3D printing, and robotics, fintech will be one of the core drivers of growth in the 2020s and beyond.
What Fintech Is and Why It Matters
Fintech is short for financial technology.
More specifically, it refers to innovative financial technology that is used to improve financial products and services.
A few examples include:
Digital wallets and contactless payments
Cryptocurrencies and digital assets
Innovations such as these have been available for some time, but inertia, a lack of need, and other obstacles slowed adoption. COVID-19, however, has sparked the adoption of a number of fintech innovations, such as contactless payments.
Health and safety, however, is only one force driving the global fintech trend.
For the most part, adoption is being driven by fundamental economic factors, such as price, performance, and convenience.
Digital currencies, such as bitcoin, allow transactions to take place without the need for third-party intermediation
Cash apps allow friends and family to send money to one another instantaneously, at no cost
Challenger banks, such as Chime, slash costs for users by offering free features, such as no-cost bank accounts and free overdraft protection
As mentioned, many investors and business leaders have undervalued or ignored incumbents in the fintech space, but that is beginning to change.
The Future of Fintech
For the next several years and decades, the world will undergo a massive paradigm shift.
Disruptive technologies such as fintech will completely transform the way we live and conduct business. And, in the same way that the internet overturned “old guard” industry leaders, these new technologies have the potential to radically disrupt markets and entire economies.
Here are a few trends we can expect to see in the world of fintech:
Digital currencies, such as a digital US dollar or a digital yuan, will almost certainly replace cash
Contactless payments will become more common globally
Challenger banks and fintech companies, such as Square and PayPal, will offer services traditionally relegated to banks, such as business loans
At the very least, these trends will result in a significant sea change in the shape of the financial services industry.
Given the other massive technological changes sweeping the world, however, some expect to see a transformative change that could result in a complete restructuring of the global financial system.