How possible is it for you to not interact with technology or money every day? You would probably have to be stranded on an island like John the Beloved of Bible times to find yourself in such a situation. The marriage of finance and technology (Fintech) began in 1918 when The US Federal Reserve Bank developed the Fedwire Funds Service, a credit transfer service used to make large-value, time-critical payments. This kickstarted the world of Fintech. These days, Fintech refers to new payment technologies like cryptocurrency, and online services such as PayPal that make payment easier, more secure and more efficient. Since adopting PayPal as one of the payment methods, companies like World Market and Rakuten have seen a steep increase in revenue and popularity.
The Fintech Industry
The Fintech industry now boasts over 5,000 companies in over 15 categories, with an average partnering rate on research and innovation of 45%. Some of the Fintech categories include lending, payments, international money transfer, personal finance, consumer banking, and insurance.
Top innovative companies in the Fintech industries include Ant Financial, ZongAn, Qudian, Oscar and Avant, amongst others. The work of these companies is complemented by the huge investments into Fintech that have been made by other firms such as Citi, Goldman Sachs, Morgan Stanley, and Wells Fargo. In 2017, these Fintech investments were made in areas such as payment (58%), ecommerce (36%), consumer banking (35%), security and fraud management (28%) etc. In the third quarter of 2017, Fintech investments in North and South America hit $5.35 billion across 158 deals, while investments in Canada was $312 million dollars.
In 2020, the Fintech industry hopes to achieve a 43% increase in real time payments, 35% growth in automation, 33% growth in blockchain, and 29% in merger and acquisitions by banks. These will be achieved by leveraging on some of the biggest Fintech opportunities such as mobile tech, automation and digitization, exploring new business models, and data analytics.
Mobile Tech And Fintech
Consider the role that mobile devices have played in the evolution of Fintech. The first mobile payment happened via text message in 1997. Take a lucky guess at what the payment was for – Coca-Cola from a vending machine. Fast forward two decades and the following are the realities:
- The biggest Fintech opportunities (52%) lie in the mobile devices sector
- Mobile tech accounts for 51% of areas of investment in technology
- In 2017, $780 billion was made through mobile wallet payments
- 50% of customers view mobile commerce as a primary Fintech opportunity
- 50% of money transfer and payments occur via mobile
Fintech And The Consumers
It is common knowledge that consumers interact with Fintech on a regular basis. In terms of financial activities that consumers conduct with Fintech companies, 84% are payments, 68% are funds transfer, 60% include personal finance, and 56% are personal loans. Insurance covers 38% of these activities, while 38% involve wealth management.
In terms of usage:
- More than half of customers all over the world are using at least one Fintech company
- 64% of all Fintech users prefer to use digital channels to manage all aspects of their life
- About 68% of all customers who are tech-savvy are using services provided by Fintech firms
- China and India have the highest number of Fintech users (84.4% and 76.9% respectively)
- Any attempt to separate man from Fintech is not worth the effort. It has blended into the human system. The only way is forward!