Finance technology is expanding at a rapid rate and is disrupting the ‘old school’ methods of providing financial services. As digital applications increase, the opportunities for fintech continue to grow. Tech giants Apple, Google and Samsung have reached out into the finance sector with the rollout of payment systems used with their mobile products. In the near future, it is likely they will continue this expansion by establishing banking systems. It is expected that other tech companies, like Facebook, will follow suit and begin their own finance ventures. International commerce companies like Alibaba will begin to expand to new markets in the United States and Europe.
How Technology Will Alter Financial Activity
Businesses must adapt quickly to new technological trends in order to provide convenience to their customers and continue to streamline their accounting. Among the foreseeable changes in finance over the next several years are these 3 fintech predictions:
- Point of sale transactions will become app based. Most customers are using smartphones for everyday activity, and paying the bill at restaurants and other businesses with phone apps will become increasingly commonplace. Businesses will be using apps housed on point-of-sale devices in order to remain competitive and not lose customers.
- The old will merge with the new. Traditional financial institutions will only be able to stay relevant by partnering with new fintech startups; in some cases, such as PayPal, the fintech company will be bought and assimilated to a traditional financial firm. Bitcoin is another plum ready for picking; it will likely be absorbed by a large corporation and hedged using conventional means. The complexity of regulations will help spur start-ups to merge with more established entities. Traditional corporations will be the source of much of the venture capital many tech start-ups will need to develop and market their innovations.
- P2P will become more prevalent. This lending model is easy to access and use, and has become viable enough to expand into new areas of credit risk and finance. As an example, Lending Club just this year has announced it will begin to offer mortgages. This is a particular area of focus for our own firm as we develop our own investment strategy to back the leading P2P companies globally.
The ease of use and mobility of the new fintech will enable a global reach that will spread quickly. Even though at present in 2016 the United States and United Kingdom are the leaders of fintech, this could change rapidly. The growth of the Asian economy will lead to a comparable increase in fintech in China, Hong Kong, Singapore, South Korea and Japan. Other regions with potential for growth the CEE and the countries of Israel. Many will be surprised to learn that Fintech is blossoming in Africa as the technology connects previously unbanked populations and adoption is arguably quicker since it does not need to displace investments in aged technology. Change is coming, and the companies that will emerge on top are the ones willing to innovate and cater to the new millennial consumer class.