It was just a few years ago when the finance industry got its technological shake-up. And a new era is already here, with innovation and creativity launching financial technology on its path to revolutionizing everything – from how money moves worldwide to how people invest.
It’s hard to imagine going back now. But we can certainly look back to better understand what’s unfolded. What exactly is Fintech, and how is it changing the global remittance space?
What is fintech?
Borrowing from Wikipedia, fintech or financial technology is the technology and innovation that aims to compete with traditional financial methods in delivering financial services. It is an emerging industry that uses technology to improve activities in finance.
Fintech is in a rapid state of growth. In 2018, the total number of fintech startups was more than 2,000 – double the number from 2016. It’s estimated that shortly, more than $20 billion will be invested in fintech startups.
Fintech isn’t just about startups and cryptocurrencies like Bitcoin, but also traditional banks. It has the potential to change an industry that spans multiple countries. For example, in addition to Western Union, money transfer services like MoneyGram and Western Union are also popular choices for sending money back home or buying products online from China.
The Global Remittance Space Innovates Like Nothing Else
We can look at these changes from both a macro and micro level. From the macro level, there’s more competition among companies. Fintech startups are creating new digital payment options that can be more convenient and secure than traditional providers like Western Union. Some of these are even offering low fee or zero fee transfer options to customers. You also have in-country mobile payment apps for sending money to friends and family back home.
The micro-level is about how people are making their day-to-day money transfers. Micropayments usually involve small amounts of money.
So, for example, you could use it to pay a website for downloading a music track or making a small donation to charity. It can also help with microlending, helping people get loans for small sums of money. And globally, this is the most significant source of income for many mobile businesses.
What’s Fuelling Growth in Fintech?
Many factors are creating this increase in interest in fintech technologies. One reason is that financial services providers need to find ways to attract new customers and keep their existing clients happy and loyal.
And this is where fintech can come in very handy. Incumbents don’t need to get rid of their existing customers. Instead, they need to appeal to a new set of users through digital payments and smart technologies.
Banks are opening new branches in emerging markets worldwide to cash in on growth opportunities. It’s leading to interesting results. You have an increasing number of people trying to save money for their children’s education using microloans. The most popular way to do this is through mobile devices. A great example is M-Pesa, a mobile payment app offering services to millions of people. But, of course, there are hundreds of other applications too.
It’s also noteworthy that 40% of all global internet users use social media networks like Facebook and Twitter every month. This means they’re getting introduced to new information about how fintech can be used in their everyday lives. But, again, there are no intermediaries required. Just a phone and an internet connection and new users are then turning into fintech-friendly customers.
Finally, the other factor driving the growth of fintech is simply that people are getting more comfortable using technology to solve problems in their daily lives.
With exceedingly efficient and exciting rounds of evolution in financial technology, fintech companies can deliver on superior innovations to serve customers. Blockchain technology, cloud computing, AI, and Machine Learning seem to be prevalent in most innovations. With all the disruptive changes they’ve brought to the world of financial services, fintech companies promise to make an even more significant impact this coming decade.
Fintech has been a game-changer for all involved. While some feel that fintech might take a while to expand its use, others argue that the revolution is already here. It is undoubtedly piquing everyone’s interest. It has redefined the way people make cross-border money transfers and has made international remittance cost-effective, secure, and swift.
We at Salt focused on disrupting the arenas where fintech potential vastly outstripped supply – international remittance. With time, fintech’s role in international remittance will become central to innovation and the next big leaps, making transferring money across borders merely one case of technology that’s already changed lives in more ways than we can count.