How is FinTech changing the way we think about money, spend money, lend money, move money….? Yael Warman from Leverate takes a peek.
Yael Warman, Leverate
This is the story of Satoshi Nakamoto, though that’s not his real name.
He had an idea for an electronic currency verified by a block chain, unlinked to any central bank or existing currency. It was the brave new world in front of our eyes. The product was called bitcoin. But however forward feeling crypto-currencies are, they are in fact the pinnacle of the logical progression in financial technology that has been steadily occurring over the past few years.
It doesn’t take much to think back to before this time, to what happened before technology. Does anyone remember when you had to go into the bank to make a transaction? Waiting in line with a deposit slip. Receiving a stamp on your deposit book. The pens attached to the desk by chains?
Since then, it has been a long and colorful history as banks have begun to take full advantage of technology. Hundreds of bank locations were closed and thousands of employees were downsized as internet banking became more accessible, more secure, and more adaptive to the needs of the users. Now, you can send money overseas, buy and sell shares or finance a house, at the click of a button, without leaving your home or visiting a bank.
With the advent of mobile technology, Bluetooth, wearables and other new technologies, the actions are simpler, more sophisticated and safer. New technology is changing banking in a variety of different ways.
Here are a few of the coolest examples of financial technology. Some are just interesting ideas and some, game changing technological advances.
1. Contactless payment
These are credit cards or smart phones that allow you to make in-store payments without bringing the device into contact with the reader. It speeds up transaction time and has been shown to increase use of credit cards for small transactions, making it more beneficial for credit card companies as well as simpler and more efficient for users and vendors. It has changed the way in which we use small change and point of sales transactions forever.
2. Crowdfunding
Not a very new idea but one that has radically changed the venture capital space and put power in the hands of the many. Now your business idea can bypass traditional means of capital raising and receive funding. Disruptive, powerful and the basis of the online sharing economy for the future.
3. Cryptocurrencies
Bitcoin, litecoin, dogecoin, the list goes on. They are the next new wave of currencies with no ties to central banks, gold standards or existing currencies. With increasing safety and more vendors making it available, it has revolutionized the institution of currencies that has existed since ancient times. You know that anything that causes the taxation services to create new categories is a serious game changer. While it also has the potential to provide strong security options, notably it continues to struggle with this aspect to date.
4. Lending club or Peer-to-Peer lending
Ever wanted to be able to get the same return on your money that banks get when they lend? Well, you too can be like a bank and provide loans for high returns. It offers various types and levels of loan applicants, rates their reliability and gives you the chance to spread your loan risk by taking on parts of multiple loans.
5. Online Trading
Once the bastion of the elite, who called their broker to purchase shares, equities and bonds, whilst smoking a cigar and eating something lovingly fried in butter for breakfast, trading is in the hands of the people. And not just people in first world countries. Anyone, anywhere, anytime comprises the reality of those who trade. You can trade on your mobile in the jungle at midnight, whilst on the loo and potentially even whilst hanging upside down whilst bungee jumping (though we wouldn’t recommend it). You have access to sophisticated charting and technical software, up to the minute news information, and automation of trading that can happen even without the touch of a button. In the world of online trading, there is no limit and no barrier.