The fintech industry is no doubt one of the most interesting areas to watch right now. The stream of projects emerging in this space promise to reset the way finance is done, and to empower individuals and communities to challenge long-standing power imbalances.
Fintech has enabled the transformation of current finance models and the creation of more efficient tools to handle money matters. Through digital applications which can be controlled by mobile phone, finance is no longer exclusively in the hands of banks. Digital payments, alternative financing and personal finance management places power in the hands of consumers and individuals, who now enjoy a variety of more flexible services tailored to their specific needs.
The coupling of technology and finance in the once-obsolete financial system is showing us that individual empowerment is the new way of doing business. Fintech has created systems which are faster, cheaper and more convenient, so understandably has made customers turn their heads away from the old institutions which had once dominated financial services.
Fintech has been an unstoppable force over the last few years. So far in 2018, the fintech market has already accumulated $41.7billion — up from $39.4bn in 2017, proving the successful trend of taking up consumer-friendly technologies. Last year, 71% of the adult UK population accessed their bank via an online browser or a mobile banking app.
Fintech is a core sector within the Fourth Industrial Revolution, whose main aim is to deploy innovative technologies to give individuals power over their own finances and data.
Key Fintech Drivers:
· Mobile payments
· AI and Machine Learning
· Cryptocurrencies and digital cash
· Smart Contracts
· Data cloud storage
“Innovation is disrupting financial services and opening up new opportunities and experiences to facilitate transactions and promote financial inclusion. The leading companies in fintech are those which develop technologies with strong use cases,” says Stefania Barbaglio, director at Cassiopeia Services, leading PR agency in the blockchain space.
When taken to a bigger scale, fintech has the power to disrupt entire economies. This scenario is seen especially in developing economies, where bureaucracy and financial exclusion have traditionally prevented certain sections of the population from climbing up the social ladder. Now with fintech in place, many countries are witnessing economic improvements thanks to wider opportunities for people to take care of money and business.
Africa is the land for the fintech revolution to flourish and is showing significant improvements not only at an economic level, but also in improved standards of living and kick-starting of development.
The contribution of the fintech industry to sub-Saharan Africa’s economic output will increase by at least US$40-billion to $150-billion by 2022, according to Financial Sector Deepening Africa. According to Ecobank, the Fintech industry in Africa will be worth more than $3 billion by 2020.
With services like mobile banking, a large part of the population who had always been on the margins of financial inclusion can now access banking services on their mobiles. 57.6% of the world’s 174 million active registered mobile money accounts are located in sub-Saharan Africa
A great example of the transformative power of Fintech is the Kenyan mobile money service M-PESA, which reached 80% of Kenyan households in 4 years. A study found that the mobile money provided by M-PESA lifted as many as 194,000 households — 2% of the Kenyan population — out of poverty.
“Africa has the largest population, resources and potential, yet remains one of the most unbanked regions in the world. There is huge opportunity for fintech to spur economic and societal growth. Technology can streamline and develop financial services and economies towards a more inclusive and equal society” Stefania adds.
Looking at the big picture, fintech has a significant social impact, helping to bring about positive change such as empowerment of individuals and communities over governments and corporations, reduction of financial exclusion, support of SMEs and entrepreneurships, all the while promoting a culture of transparency and accountability.