Fintech, Smarter Businesses in Broad Growth.
Financial services had largely defended the Silicon Valley until 2008, when the global financial crisis caused big banks and money managers to lose consumer confidence. At the same time, free software and cloud computing made it easier than ever to launch a technology company. Soon, Fintech companies appeared everywhere, but especially in California, New York, Berlin, Shanghai and London.
However, some bankers scoffed when Fintech’s newcomers promised to reinvent their business. Now they are joining the revolution. The last example: BNP Paribas acquired a French digital bank called Compte-Nickel in April to access younger and lower-income clients. Surveys of financial services firms show that half plan to acquire fintech firms in the next three to five years. Further changes could shake the market even more.
Home buyers, entrepreneurs, and college students often went to the bank to apply for a mortgage, small business credit line, or student loan. Financial technology, or fintech, is rapidly changing all that by making it easier to save, borrow and invest online or with a mobile device, without ever dealing with a traditional bank or broker.
For old-fashioned banks and money managers, fintech is causing dramatic upheavals, possibly the most since the first mainframe computers turned to life on Wall Street in the 1960s. It has caught the attention of cautious regulators . Industry veterans are also watching – some cheering, others booing – to see if the hype becomes reality and threatens competitors or perhaps their own jobs. Will the promise of a digitalized and democratized financial services industry bring more competition, lower costs and greater access for all? Or will key players ultimately stay on top, with their strong fees, commissions, compensation and largely untouched guardian roles?
Blockchain and Bitcoin.
Finance veterans are developing new applications using blockchain, the free database that tracks transactions in bitcoin, the digital currency. Stock exchanges and clearinghouses believe that blockchain technology can simplify the negotiation and settlement process.
Mobile payments. Entrepreneurs have started fintech companies in emerging markets like India (Unocon), Philippines (Coins.ph) and Africa (BitPesa), using blockchain and internet to transfer money and convert currency for less than banks now charge.
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