(Editor’s note: This story and infographic was first posted on the blog for DealSunny.com, an India-based e-commerce website. It’s reposted here with the permission of the author.)
The financial services industry is evolving at a rapid pace, introducing new and efficient technology, the kind of which we haven’t experienced since ATMs, index mutual funds, and discount brokers first burst on to the scene when everyone was still wearing flares.
While some people are bringing flares back, we’re witnessing true innovation with the advent of the blockchain and peer2peer financial platforms, mobile wallets and payment processing. The overall shift is toward doing everything quickly and efficiently online, with lower fees and interference from large institutions.
Everything from banks to retailers and individuals is being impacted, and those that don’t jump on the bandwagon will be left behind by the financial technology revolution. Long running retail banks are being challenged by online-only startup banks. Traditional lenders are being overlooked for p2p marketplaces where the people borrow from the people. And portfolio management and financial advice is being replaced with apps and so called roboadvisors.
This has all understandably brought about huge growth in fintech investment as startups disrupt the old guard, and the old guard desperately try to reposition themselves to survive the transition. There are currently $25.8 billion in total funding making its way through the industry.
Fintech Means Innovation
A new infographic compiled by DealSunny.com takes a closer look at the entire fintech landscape and how it is digitally disrupting the financial world, revealing some pretty interesting facts along the way.
Perhaps one of the most obvious (though still most important) is that the evolution of fintech is very much driven by consumers. Simply put, new tech is making the average person’s life. For example, survey data reveals that:
• 43.4 percent of those who have adopted modern fintech solutions did so because it is so easy to get started. You just enter an email address or download an app, and everything you need is right there.
Long gone are the days of standing in a line at the bank and filling out reams of paperwork to access a financial service.
• 15.4 percent switched to modern fintech because of more attractive rates and fees. It’s a no-brainer that if something is cheaper people will flock to it. And this isn’t just true for consumers. Retailers, for example, are now more than happy to accept payment in cryptocurrency Bitcoin, because the cost to process the payment through services like Bitpay is actually less than the 3% transaction fee for a credit card. This is just one of many examples of how new technology is allowing people to do business and save money.
• 12.4 percent of fintech users say they like the wide access to different products and services. In the past, certain products and services were confusing and expensive for the average person to explore. Today anyone with a mobile device can manage assets, lend and borrow, invest, and play the markets while getting high quality information at the swipe of a screen.
The crux of innovation is doing better than established solutions. This is exactly what we’re witnessing.
5 Fascinating Fintech Facts
But what else is happening in the world of fintech? Here are five fascinating facts you might not have known:
1) The highest valued fintech startup is Chinese. Peer to Peer lending platform LUFAX is currently valued at $10 billion and is changing the way people invest and borrow in the most populous nation in the world. That’s obviously big business! It’s also a sign to the rest of the world that the once tightly controlled country is becoming more free and therefore more of a direct competitor in the free market.
2) Around half of all banks have or will be opening technical innovation activities over the next two years to try and remain relevant during the fintech revolution. Whether it’s analytics, lending platforms, payment processing, money transferring, or handling cryptocurrencies, they are all slowly adopting an “if you can’t beat them, join them” mentality in order to maintain their power and control over the world’s economy. HSBC has invested $200 million in tech startups to help make sure they keep their technology up-to-date. Whether it’s too late or they are just not equipped to adapt is something we’ll understand better as we head to 2020.
3) Algorithms are replacing humans. We’ve all heard about how technology puts workers out of jobs through automation. This is commonly demonstrated by the rise of self-service checkout machines in supermarkets. But did anyone really expect computer algorithms to replace human financial advisors? Robo-advisors are now all the rage with the first generation of wealth management apps. You can organize your whole financial portfolio and get investment tips and important alerts based on the raw data instead of a suit’s interpretation of it. Apps will also help you manage your bills and tell when it’s time to switch to a new provider to save money.
4) Governments are in on the action. Any competent government will realize that courting fintech startups will help keep their economies prosperous. That’s why the UK government has launched numerous tax incentives and benefits to new businesses in the industry. They are also pumping millions into cyber security to ensure it is safe for fintech to evolve on its shores. Likewise, in the past year the U.S. government has tripled investment in accelerators and incubators to allow their already dominant fintech industry to continue to flourish.
5) Lending is the most heavily invested segment of fintech followed by payment processing. In short, people want to be able to borrow, and send and receive money in the fastest and most efficient way possible. This is being accomplished with simple app-based platforms.
If you’d like to know more facts about the current fintech landscape, and how it is changing the nature of nearly all financial activity across the globe, check out the full infographic here.