Technology is one of the most ubiquitous and unstoppable forces in our modern world, impacting nearly every industry across the board. Naturally, finance is no exception.
However, technology seems to pose a larger threat to the financial realm than any other, as banks and other institutions have employed a business model that has worked rather well over the years, driving large profits and creating further room for growth.
Financial technology, otherwise known as fintech, aims to disrupt this business model in order to bring more financial inclusion to those who would not normally be granted the opportunity, such as blue collar workers, marginalized people groups, or members of rural communities.
Fintech has drastically changed the climate of the financial industry, forcing smaller firms and large institutions into a state of fight or flight. Either they adapt their policies to remain relevant in the eyes of the public, or they hold tightly to their outdated practices and fade out of the picture over time.
With that in mind, let us examine the other ways in which fintech could impact the financial industry.
Venture capital firms are not as necessary as they once were
In the realm of fintech, venture capital firms are no longer a necessary method of acquiring funding. This shift was exhibited at the beginning of 2016, when global venture capital investment in fintech decreased by approximately $22 billion from 2015.
Some view this as an indicator that venture capital firms are losing authority. However, a popular opinion is that venture capital firms now feel less inclined to support the next great disruptor of the financial industry, hence their lack of interest in funding even the most innovative designs.
Banking fees may become a thing of the past
It has long been rumored that banks make upwards of $4 billion annually just from the fees they obtain during fund transfers. Because of fintech’s mission to make finance more accessible and inclusive, many of its startups seek to decrease or eliminate banking fees entirely, even in international transfers, allowing their customers to keep more of their own hard-earned money.
Mobile banking could continue to rise in popularity
Although mobile banking is already a prevalent force in many regions of our modern world, it is only anticipated to grow with the fintech industry, which is projected to expand by 55 percent within the next two years alone. Therefore, we could see digital wallet systems like Apple and Android Pay reaching into even the farthest corners of the world by 2020.
Evidently, great changes are not simply looming on the horizon; they are already here, slowly shaping the future of one of the most influential industries in the world. Regardless of what is to come, it will be intriguing to see how far the financial realm will come in just five years’ time.
Paul Saunders 