Almost two decades ago one financial organization truly changed the world. PayPal has inspired many Inc. 500 entrepreneurs to become industry disrupters and change the business relationships to money forever.
For a long time, finance was seen as a highly technical, heavily regulated industry under control of big banks that oppose disruption. But now, if we don't count an occasional global meltdown, finance is riding a big entrepreneurial wave. Interest and demand for upstarts' services are growing, provoked by the board dissatisfaction with giant banks; supply is steadily growing, powered to some extent by financial experts looking to offer an alternative and do something other than working with the same mega corporations. And low-interest rates have allowed many money-related startups to get the much required raw capital.
What's more important - clients have embraced the idea, mostly due to the rise of the portable, on-demand economy. The world is much more connected today than it was 15 or 20 years back. The tools such as cheap computing power, cheap storage, and powerful analytics are now easily accessible, the government regulations have changed, and individuals are much more inclined to deal with their money and business on the web.
Furthermore, what a huge, significant market they want to change. Goldman Sachs estimated upstarts could take over up to 4.7 trillion dollars in yearly income, and 470 billion dollars in profits, from traditional financial services companies. Even a small fraction of a market share involves serious money, so financial investors are falling all over themselves to back new contestants. Or, on the other hand, to get in themselves - Goldman saw a big opportunity in Fintech, and decided to promote its own web-based lending operation. Some estimations say that financial speculators put 23.5 billion dollars worldwide in Fintech in last two years, and Statista estimates that 20 billion dollars’ worth of investments will go to Fintech in 2017 alone. Fintech industry has two unique things to offer - better utilization of information and frictionless client experience.
In some way, Fintech is being reformed by business people for business people. It's possible to get a personal or business loan from Kabbage, Lending Club, or OnDeck, instead of a traditional bank where the process takes forever. As opposed to scrambling to interest venture capital companies or other typical investment offerings, users can now go to Kickstarter, CircleUp or Indiegogo. Company's transactions could be easily processed by Square, Stripe, or WePay, saving time and money. Furthermore, anyone can manage its money automatically at Betterment or Wealthfront by giving itself a daily allowance and getting a better grip on the money spending. Other platforms used creativity to save a dime for their users. For example, Paribus scans user's emails for receipts after purchase to get money back if the price drops. It's even possible to replace money itself by utilizing Poloniex, Coinbase, or other platforms that serve as a gateway for the use of digital currencies. With cryptocurrencies, payments can be made in an instant and with minimal costs.
Just like the Internet has revolutionized the way we communicate and gave people around the world access to information, Fintech is decreasing information asymmetry in the global market, helping to reduce the risk and promote more efficient allocation of rare assets.
Pioneers in the business — the individuals who are setting foundations for this new sector — are clear about the vast potential of innovations in the financial industry.
Digital transactions bring transparency in payment systems, greater audit capabilities, and better transaction security. By reducing risks, the need for regulations is also reduced. In this market, risk reduction and deregulation of business environment actually go together.
The frictionless operation of Fintech technological advancements, such as Blockchain and cryptocurrencies are producing new money streams not just in financial services industry but all over the economy.
During a Fintech roundtable organized by the Chinese government in Shanghai in 2016, Lufax, the second biggest peer‑to‑peer loan provider in China, talked about real‑time customized insurance choices. For example, car insurance that could be valid in the specified places you may drive through or on a particular day, including traffic and weather conditions.
But it's not only society that gets benefits from Fintech. The employees in Fintech industry can find opportunities to improve themselves as well. The big Fintech companies are utilizing the best technology and methodologies to shape their products. From the latest innovations in machine learning to new programming languages and getting access to previously restricted datasets; individuals working in Fintech are using the best tools available in the world. The companies are aware of the dangers carried by fast-paced growth, such as the shortage of skilled workers. This is the reason why the majority of businesses are looking to provide top-notch training and shared critical thinking.
Through these learning sessions, it's possible to see how skilled and motivated are the people working in the Fintech companies. The Fintech business is pulling in the absolute best and brightest minds right now. If you're looking to become a part of all that, just browse our job listing and find the perfect fit for yourself.
Fintech is taking a fast track to success, and financial investors are not the only ones who can benefit from this fast-growing sector. Make sure to stay up to date with the advancements in the industry, which will help promote a democratization of financial services and tools alike, from payments to philanthropy and wealth management.
Finally, will Fintech replace traditional financial institutions and banking system is entirely debatable. But one thing is sure - a large number of cost-effective and easily accessible financial tools and services will without a doubt force the whole financial sector to change. This change, and healthy competition in the market will bring many benefits to the users and Fintech employees as well.