The future of banking and finance is digital and the reason is in your hands: the smartphone. A phenomenal increase in the use of smartphones, and the debut of fresh technology like the IoT(Internet of Things) has encouraged people to depend on their phones for just about everything. 2008’s global financial crisis was a major blow to the creditability of traditional financial institutions; customers wanted an alternative and fast! Since then there has been a rapid disruption of the financial services industry – what is commonly referred to as Fintech.
The following startups and technologies are actively challenging the status-quo in the World of Finance this year:
P2P or Peer-to-Peer payments is a way to use technology and the Internet to transfer funds between people. This allows customers to transfer money from their credit card or bank account directly into another individual’s account via the mobile phone or the Internet. Paypal has been dominating this sector the past ten years, but with the growing adoption and acceptance by financial institutions, more and more people will be using P2P in their daily-life.
TransferWise is a startup that has developed Peer-to-Peer money transfer platform that not only transfers money. It also protect users from hidden banks fees and inflated exchange rates on various currencies.
Imagine a mobile wallet that automatically converts money into local currency while you travel -saving your exchange rate fees. The team at Revolut has developed an app that does just that. Their app is lets you send money via SMS, email, WhatsApp and various social media platforms – all without any pricey fees. Revolut is up and running in 90 countries at the moment and is dealing in Euros, Pounds and U.S. Dollars -Try out Revolut on your next international trip!
Do you use a key fob to pay for the petrol at the pump? If so, you are using a form of contactless cards to pay for services and products. The total variety of contactless cards include:
- Pre-paid, debit, charge and credit cards
- Key fobs
- Wearable devices, such as watches and wristbands
- Mobile devices, such as smartphones and tablets
The cards use radio-frequency identification (RFID) or near field communication (NFC) for making seemingly secure payments. Paying via contactless cards has become second nature for most Brits as stats show contactless cards being one in seven of all cards-based transactions. There has been a 29.9% increase in contactless cards in the U.K. this year and there more than 92 million contactless cards in issue. Currently the upward limit for payments is £30. Despite this rapid adoption of contactless cards, there is a real concern regarding fraudulent behaviour. Criminals can use card readers to swipe information while you walk down the lane or shop in a store and this works even if the card is in your purse or pocket. Contactless cards are most vulnerable when they are in the back pocket or in an outside pocket of a purse. In tested scenarios, the best way to secure the cards are to bundle them and bury them deep inside a purse or laptop bag. The upside is that banks will usually refund the full amount incase of fraud.
Facebook is making strides in the chat window payments arena; it has just announced plans to integrate Paypal into Messenger for it’s U.S.-based users. The chat service was already testing out payment options with American Express, Visa, Stripe and MasterCard.
What’s faster then a gazelle? Zelle, an insta-pay solution, is working with over 20 banks in the U.S. to allow speedy payments within minutes. Zelle’s payment tool includes an option to split bill s between several people.
Fancy saving a little money on the side? Fintech startup Nutmeg has developed an online platform to make investing as easy as 1-2-3. All you need to begin is £500 and the team will invest the portfolio on your behalf. There is a management fee of 0.3 percent – 0.95, which seems favourable compared to the UK active fund average of 1.58 percent. If you want to withdraw your money at anytime, there are zero exit fees.
Consider a world where you no longer have to pay ATM fees or Wire transfer costs? The onset of digital currencies have challenged the numerous fees consumers have to pay for using their own money. Bitcoin and other Altcoins have made bypassing these additional costs easier than ever. The latest entrant is Ethereum’s Ether with one key difference. It’s value is not financial; it is based on sheer computing power. Digital currencies are bound to dominate the imaginations and conversations of Fintech innovators in the coming year.
From publicly recorded digital transactions to chat-enabled social payments, we have just begun explore the opportunities for innovation in the realm of Fintech.