Over the years, people have been using traditional banks, going to branches, waiting in line for your turn to make a transaction. There are things that a traditional bank can learn from online businesses. Online businesses are booming especially this day and age, as most of transactions can be done at the comfort of their own homes.
Money has always been an important part of our lives. If we take a look at history, we can see that the first ancient tablets uncovered in Mesopotamia were loan records. We might think that money plays a major role in our lives today, but looking at history shows us that it’s always been that way. Like it or not, money makes the world work.
However, thousands of years have passed since the fall of Mesopotamia. During this time, there were revolutions, wars, peace treaties, and scientific breakthroughs. The one we’re living in right now is called fintech, and it’s all about automating modern financial services. It’s here to help individuals and companies by using software to combine the worlds of finance and technology. Click here to read more.
Let’s take a look at all of the different ways in which you’re using this technology. First of all, when you receive a paycheck from work, you use your smartphone to take a picture and send it to the bank you’re using to process it. There’s probably another app on your phone that helps you figure out how much money you need to set aside for rent, amusement, utilities, and investments.
When you’re splitting a bill with your friends, you could use Cash App, Venmo, PayPal, or Zelle if you don’t have paper bills in your wallet. If you’re an Apple user, you could use their services to pay for a cup of coffee or a sandwich in a fast-food restaurant. If you’re taking a cab, Uber, or Lyft, you can even use Bitcoin or other types of cryptocurrencies to pay for the ride.
In the past couple of years, financial technology has become a major aspect of our professional and personal lives. The numbers have increased in the last two years, ever since the pandemic started. Since every business had to rely on remote operations, this hastened the transition from physical to digital payments. Even though it seems like a difficult idea to grasp at first, that’s only because there are tons of services, platforms, and tools that vary in their niches.
A Breakdown of Financial Technology
Fintech is an umbrella phrase that incorporates technologies that are bundled together to disrupt, digitize, simplify, or supplement the existing financial world. This includes applications, algorithms, and other types of software that can be used on a mobile phone or a computer. Follow this link to read more https://timesofindia.indiatimes.com/blogs/voices/impact-of-fintech-on-business-and-the-common-man/.
One of the most modern examples is trading platforms that you can use on your phone. Instead of interacting with a broker on the New York Stock Exchange, you can press a button and buy or sell a stock. These modern platforms allow you to use peer-to-peer lending, trade cryptocurrencies, apply for financial aid, pay bills, transfer money between accounts, and deposit checks.
Of course, there are subdivisions in each of these categories. There are services that allow you to round up your spending and invest the change in a diversified portfolio of your choice. Little by little, that amount of money grows.
There are also insurance apps that allow you to create a policy within every sector and wealth technologies that help you manage your investments. Loads of businesses are now relying on this tech for support in their e-commerce endeavors, and there’s going to be a massive increase over the years.
What Has Been the Evolution of This Technology?
Fintech is not a new concept at all. Even though it gets a lot of hype nowadays, that’s because it was lying under the radar for a very long time. Cryptocurrencies have been the same since the main premises started over fifty years ago. The notion of fintech has been in the programming world for decades. A lot of scrappy startups created solutions that the entire world is using, which made the sector blow up.
What’s the Impact?
The world of finance doesn’t have the best reputation when it comes to accepting change. They’re not associated with agility and making fast decisions to improve their services. Nevertheless, innovations can’t be ignored for too long.
Company owners and consumers are fast to accept solutions that help them make fast and flexible payments. Over the past couple of years, there have been products on the market that grant immediate satisfaction such as a bank for digital entrepreneurs, which is what most business owners want to have. Now, systems that used to take weeks or months, such as making international money transfers, can be performed in a few seconds.
Five years ago, that would have been impossible. Let’s take one example into consideration. Imagine how long it would have taken the United States government to distribute and verify every single person that was eligible for a stimulus check during the pandemic.
It would have taken years to make sense of the 300 million people living in America. However, by integrating the databases of all of the banks and working closely with their data, they were able to distribute money where it was supposed to go. You just wake up and see the money in your bank account. There’s no hassle and no time wasted.
Additionally, this type of tech gives institutions the ability to satisfy a number of requirements in areas that don’t have banks. This is an amazing improvement in third world countries which are still in development and don’t have the proper means to use government assistance.
Another major benefit is that the processes are completely automated. It’s a numbers game, which means that human action can’t mess everything up. This improves the capacity of programs to do thousands of transactions without a single mistake.
People can be clumsy, which is why they’re programmed to do everything perfectly. In some cases, there is a way to reach a conventional advisor or a broker, but that’s in addition to the algorithms which help you to navigate the challenging activities.
This means that you can apply for a mortgage or a loan without the need to go to a bank. There’s none of the pressure that you feel when you talk to an advisor to meticulously go through the pros and cons of your new portfolio. With fintech apps, you can just compare what you’re doing with the best of the best. Chatbots are slowly replacing customer service agents since they can handle multiple inquiries all at once.
The main impact of this addition in our lives can only be answered on an individual level. If you’re someone that deals with a lot of financial decisions in a day, then this concept will feel like a positive revolution in your life.
On the other hand, if you’re a person that likes a lot of human contact and doesn’t necessarily like technological progress that much, it might feel like a nuisance that you have to learn. That all depends on the decision of how many services you want to deal with.
Is it safe?
One of the most fascinating discoveries of our time has been the blockchain. That’s a completely revolutionary way to look at banking in general because it makes the ledger of all transactions completely transparent and public. That’s why Bitcoin works so well everywhere.
A couple of years ago, the only way you could send money to another person was through a bank or by giving them cash in their hand. But, that’s a centralized way of performing a transaction. You need to trust that the bank will not make a mistake, and if that happens, it’s never their fault. However, decentralized finance, or Defi, has changed that concept to fit the modern world.
Now, computers around the globe are competing against each other to solve puzzles in order to validate blocks that get added to a public ledger. This means that there’s no need for anyone to need the endorsement of Wall Street if they want to share money or information.
However, just like anything in life, there are possible hazards in space. The blockchain world is still unregulated, which means that there’s no one you can go to if you happen to make a mistake. There’s also the myth that all of the new startups that rise up are altruistic and have a higher moral practice than conventional banks. It’s not wise to be excessively optimistic in every single company because you might get burned. That’s mainly because a lot of startups in the space went bankrupt in their first year of operation.
It’s wise to avoid projects that have grandiose claims or still haven’t proved themselves in the marketplace. If you decide to interact with them, always approach them with a bit of skepticism in the back of your mind. There’s no agreement in the corporate world on how safe the entire field is, but there’s a lot of expansion, which signals that there’s trust in the future of the projects.
What will happen in the future?
No one knows what tomorrow will hold. That’s true for every niche. However, experts estimate that the entire industry will receive a lot more demand in the following years. Clients, banks, and businesses are becoming more reliant on the internet to assist them in managing their lives and their finances.
For now, investors are still shy to invest because they’re looking for long-term trends that will emerge. Finally, there have been loads of partnerships and engagements between banks and financial institutions, which promise a lot of growth in P2P transactions and lending, artificial intelligence solutions, cryptocurrencies, and the world of blockchain. This type of technology will definitely become a key participant in the global economy, and it looks like it’s going to be that way for a long time.