In the last decade, fintech has grown at an astronomical rate. Fintech is not only changing the way payments are made and how investing is done, but also how businesses work.
Financial technology has really revolutionized the financial services industry at lightspeed and the Covid-19 pandemic only accelerated this trend, with entrepreneurs looking to find ways to maximize profits in a time of remote working. However, while social distancing is no longer required, these changes inspired by fintech are here to stay.
Global fintech companies saw a remarkable $22.8B raised from Venture Capital funding across 614 deals in Q1 of 2021; numbers that are only expected to rise. Here we explore three possible directions that could write the future for the world of fintech.
Sustainability in financial services has very much moved in from the margins to become a key priority for organizations.
According to a global corporate sustainability report by Nielsen, 66% of people are prepared to pay more for goods and services if they come from sustainable companies. This figure jumps to 73% among millennials.
Generation Z is being hailed as the generation of sustainability, with the vast majority willing to spend 10% more on a sustainable brand.
The first thing that fintech startups may look to do is to understand their carbon footprint. This can include energy use, their supply chains and workforce movement and transport, such as international flights and office commutes.
AI and value creation
A report by McKinsey estimated that artificial intelligence (AI) could generate up to $1 trillion additional value for the global banking industry annually.
Evidence of this was plain to see in the pandemic, which certainly helped with the advancement of AI, automation and cloud computing.
With more streamlined AI algorithms, businesses will be able to more match customers to the products and services that are right for them without hours of laborious paperwork on the part of either party.
Lastly, the evolving business-to-consumer market has always historically been a bit of a roadblock for pretty much all goods and services across the world. Previously, a person’s ability to buy and their ability to sell has been limited by their physical access to commercial properties, transportation and more.
However, one thing that the pandemic did do was to level the playing field between the companies that boast mammoth delivery service capacities and the small businesses who had far greater restrictions when it came to outreach.
The growth of fintech will undoubtedly increase the capacity of business-to-consumer services. The importance of an online presence for a small business and the accessibility of things such as interest-free installment pay options will almost certainly result in a growth in sales made directly by independent businesspeople to consumers.
Knowledge of how to work within the banking and finance systems, which was once largely denied to working-class families, was made accessible through distributed networks of trained financial educators as a result of the growing fintech industry, which can only be a good thing!