Whether youve heard about this particular concept or not, you have surely reaped the benefits of the numerous products and services that originated in the Fintech Revolution. From mundane activities, such as paying bills online, to the more avant-garde ones, like developing blockchain-based cryptocurrencies, the idea of fintech encompasses all processes that make handling our finances easier by usingdigital technologies and computer-powered algorithms.Basically, if you can think of a way to make your financial life less obnoxious, the chances are theres already a fintech company working on the solution.
It all started way backin 1918when theUS Federal Reserve Banksintroducedthe Fedwire Funds Service,the first electronic fund transfer system, which relied on now-archaic technologies such as the telegraph and Morse code.The next two significant achievements were the creation of thefirst Diners Club credit card in 1950,by Frank McNamara, and thelaunch of the first ATM,by Barclays London branch,in 1967.
Perhaps the most crucial stepping stone in the Fintech Revolution was the advent of the internet. It quickly led to a myriad of revolutionary inventions, such as online bank accounts and mobile payments. It even sparked theinception of the first cryptocurrency,Bitcoin, in 2009,which led to2017s worldwide Cryptomania, during whichCoinbase-an online cryptocurrency exchange-exceeded $1.5 billion in value.
Today, most experts understand that financial institutions will have to invest in fintech to avoid becoming obsolete.The consumer banking sectoris leading the way when it comes to being themost disrupted industry, at 72%. However, some predictions indicate thatin the next 3-5 years 84% of insurance corporations will begin to cooperate with fintech companies, making them the champion of this digital innovation.
Some of the most significant disruptions originated with the introduction of artificial intelligence (AI), blockchain technology, cloud storage, and crowdfunding. Today, around46% of large fintech companies are powered by AI.Nevertheless, estimates show that, in addition to its use in the back-end processes,AI will also take part in customer interactions, driving 95% of all communication with users by 2025. There are already very powerful robots capable of chatting with humans, such as Sofia. Its estimated that their capacities for human interaction will increase, while their prices will decrease, prompting companies to switch to automated clerks to lower costs and improve customer satisfaction.
Usingblockchaintechnology is another fantastic way forbig banksto cut costs. In fact, its projected that theycan save $12.3 billion per year and reduce the infrastructure by 30%if they use this technology.Ripple, a cryptocurrency designed specifically to be compatible with the existing financial structure, is leading the way byoperating with 15 out of 50 global banks, including UBS, Bank of China, and Santander. Given the benefits that the technology brings, it comes as no surprise that77% of fintech firms are expected to adopt the blockchain by 2020.
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It isnt always easy to predict what the future will bring, but the outlook of the fintech industry seems very exciting. One area where we can expect improvement issecurity. We should witness an introduction of advanced authentication methods, such as iris and fingerprint scanners, which will replace the unreliable and cumbersome passwords.
However, the major improvements lie in making financial services more user friendly and less resource hungry, while at the same time tailoring them to the individual. As Joy Schoffler, the Executive Chair of FinTech Professionals, says: At the core of everything is simplification and personalization. Its possible that voice recognition technology will allow you to order things and pay bills just by saying a few words, while micro-embedded wearables will enable you to shop without ever using a cash register.
Whatever the future brings, one thing is certain: the more you know about the history of fintech development, the easier it will be to navigate the exciting world of life-changing and brilliant technologies that the major fintech companies are working on. Thus, check out the infographic below to learn 87 interesting stats on the growth of fintech. Itll help you stay ahead of the curve when it comes to understanding one of the most important revolutions of the digital age.
