Rapid technological developments have disrupted many industries, including the financial sector. The fact that there are more than 500 new currencies and payment methods impacting money transactions all over the world shows that traditional banks no longer hold the exclusive monopoly over the financial world they once had.
The last time such a drastic change occurred was during the dot-com period. Banks were forced to quickly adapt to novelties brought in by the internet revolution. Viewed from this standpoint, the dot-com period was just an introduction to the fintech era.
Today, thousands of startups are offering financial services to individuals and companies, thereby creating a very competitive market. For instance, almost 93% of small businesses have stated they prefer technological solutions when possible.
Some of the highlights from 2017 and 2018 state that almost 15 million users switched to fintech companies and their services. With this in mind, it’s no surprise that 39 unicorn fintech startups have managed to accumulate $147.37 billion of the total worth.
But what can we expect in the future?
First, fintech startups will raise the bar in transparency and efficacy of financial transactions which will, in turn, alter customers’ expectations. It will become normal to send and receive virtual money and finish transactions in a matter of seconds.
Second, fintech companies will invest in AI in order to automate as many processes as possible and therefore, further facilitate financial transactions.
Traditional banks will have to develop business models that will be able to match fintech if they want to remain competitive. Recent statistics show that one of the primary areas in the banking industry has been digital transformation.
Technological development shows no signs of stopping, which will radically change the financial ecosystem.