Fintech has grown significantly since 2008, and it involves a lot more than just the payment terminals we use at retail stores. Fintech now helps individuals find short-term loans, and has helped fund projects that might otherwise not exist. The fintech revolution is happening, and here is just a sampling of the many important innovations that are beginning to come to light.
A significant portion of the public remains underbanked, which is a problem if the United States wants to encourage financial growth and wealth management. Individuals have a need for products like financial advisors, short-term loans and more secure transactions. Banks are often too large to respond to these concerns, so consumers basically have this need that is perpetually unfulfilled.
Newer startups are more agile, and not subject to the same level of regulation as banks. Therefore, startups are filling the void where banks are otherwise unable to respond. Banks also benefit from increased security, especially as it pertains to machine learned models. These models “teach” the banks about a user’s buying habits, and help to detect fraud. One day, they may be applied at the macro level, where they can help forecast the markets and encourage people to save more.
Largely considered to be in its nascent stage, cryptocurrency represents the closest we have come to a revolution in fintech. This currency is anonymous, offers lower transaction costs, and would help to provide increased access to capital. The only challenge is legitimacy. There is a great deal of money and effort behind these currencies, but experiments are still being conducted to determine how the currency will fit into global commerce.