4 Reasons Why FinTech Is the Future
By James (Jiaqi) Wang, 24 Nov 2020
Since the beginning of 2020, the COVID-19 pandemic continues to pose a huge challenge to traditional financial institutions. Lockdowns and social distancing requirements meant that few customers, if any, could not be served in a brick and mortar branches, putting additional strain on other channels at a time when record numbers of people are panicking as their finances have been impacted due to fall out of this pandemic. Businesses, too, are seeking help due to a dramatic drop in revenues. However, FinTech companies are well-placed to deal with digital demand and work from home conditions. The pandemic has undoubtedly accelerated the growth of FinTech.
Here are the 4 reasons why FinTech is the future.
#1 Potential Blockchain Benefits are Increasing
Blockchain can remove the need of a central intermediary to do asset transfers. Blockchain also improves the speed of transactions. Payment typically goes through a central intermediary that uses multiple steps to authenticate and authorise the person who is allowed to send that value, the transfer of the transaction details, and the actual settlement. Settlements often take two days or more. However, blockchain reduces the steps into one step that can be done within a few seconds or minutes.
Source: Deloitte
#2 Regulators are Showing Interest in FinTech
In places such as China, Australia and the United Kingdom, regulators are actively looking to set up sandboxes to test scenarios and identify how the technology can be leveraged to solve problems. In September 2020, the Shenzhen (China) municipal government announced a giveaway of ten million CNY ($1.5 million) in central bank digital currency (CBDC). Fifty thousand people will receive the gifted money on a lottery basis in amounts of 200 CNY as part of the digital CNY tests.
Source: Ledger Insights
#3 FinTech Can Solve the Credibility Issues
Troubles with peer-to-peer lending (P2P) have proved that although the idea of reinventing finance is lucrative, it isn't easy. But with the rapid growth of big data and cloud computing, FinTech can solve the credibility problem, and greatly reduce transaction costs and risks.
Source: Devdiscourse
#4 Reaching Underbanked
Due to cost constraints, the bank’s brick and mortar branches are unable to reach people in remote areas. FinTech could help banks in providing financial services to people who lack access at lower costs by maximizing economies of scale. FinTech is increasing the speed, security, and transparency of transactions and allowing for the development of sustainable financial products tailored to the needs of people with low, unstable incomes.
Source: Devdiscourse
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