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‐Thanks to continuous innovation and a promising future, fintech is the right sphere to invest in.
‐Leaders in Global finance have always thought of fintech as a great driving force that can change entire industries. According to Goldman Sachs, the worldwide fintech pie now reaches over US$4.7 trillion in worth, with more than 12,000 startups in various countries, and a lot of fresh startups constantly surfacing.
‐Fintech companies are expanding so rapidly because of the wealthy and tech-savvy customers. Capgemini’s research has found that nearly half of clients (46%) use services offered by three fintech companies or more; also 60% of financial institutions see these companies as potential partners.
Why is this sphere thriving? It has made the expansion of capital access much easier to small businesses, women, minorities, and immigrants, who previously regarded fundraising as nearly impossible; in a way, the technologies leveled the playing field.
Enhancing financial data security
It’s an enormous challenge for banks and financial institutions to protect sensitive data. With that, there are strict data privacy requirements, and the banks and financial organizations are under constant pressure to be transparent regarding policy steps taken to strengthen data protection. That’s why such companies invest in fintech – they need to protect themselves and their clients from losses due to cyberattacks.
In addition to security reasons, fintech services ensure convenient transactions, which lead to frictionless cash-flow and perfectly smooth financial operations. A working cybersecurity strategy involves encryption as well as controlled security policies. These steps ensure protection from cyber-attacks, as fintech makes it possible for businesses to monitor all the traffic and minimize potential threats.
Not only does fintech dramatically reduce the costs of services, but it provides great results, too. Automatization of all processes and human-in-the-loop computing systems allow for carrying out functions smoothly. Fintech companies don’t have to waste money on archaic technologies like call centers.
They already have all the necessary information about the client in case a problem arises, so they are likely to know about it in advance, which gives fintech companies a unique ability to have a plan before it’s even needed.
New fintech companies, too, adopt multi-channel strategies and use the most advance digital marketing tools without having to pay the expensive regulation costs. Compared to banks, fintech companies only face 1% of the acquisition costs.
Blockchain in various industries
According to the World Economic Forum’s estimations, by 2027 blockchain’s net worth is expected to rise to 10% of the world’s GDP. About 90% of banks from Europe and the US are investing in this technology.
Cryptocurrencies have a large share in the fintech market, there are many startups building around the most popular blockchain-based currency, Bitcoin. Nowadays, consumers need uninterrupted control over their finances. In the past, a system that can’t be mismatched, which is not controlled by the government and with no fees was impossible to even imagine.
The app world
Digital payment is the biggest product of fintech right now, it makes up for 25% of the whole ecosystem. Almost all smartphone users make mobile payments; this is why mobile payments alone are expected to break the $1 trillion record in 2023.
There is still significant potential for growth. Because of the high fee in transactions, most American users have to lose a part of their revenue. For instance, a $100 transaction will result in $97.30 in earnings for merchants on average. Starbucks decided to try out a new approach to change this situation – their app gives the consumer an opportunity to pay using money from their bank account or credit card to avoid fees.
The more fintech develops, the more concerns the governments have regarding it, and the more regulations they are trying to impose, especially with the integration of technology in the financial sphere. This has multiplied regulatory problems for lots of companies.
In many cases, regulations can be detrimental to growth, we could observe this in many sectors. They are meant to make things safer and more controllable, but this also slows things down. However, the case of fintech has been the opposite so far, and the regulations led a significant acceleration in the sphere.
In order to limit the amount of persona
l information that the banks have access to, the European Union has passed the General Data Protection Regulation. Some other states like South Korea and Japan also followed the EU’s example.
Hopefully, you too see the potential of fintech now and will use this information to make a smart move and invest in this amazing sector. With its promising future, fintech is a great way to gain the maximum return of your investment.
Investing in fintech is quickly becoming a popular trend as the industry has become a major player in the financial markets. With advances in technology, fintech has become an increasingly attractive option for investors who want to take advantage of its ability to improve efficiencies, increase transparency and reduce costs. With the everchanging markets, now is the right time to start investing in fintech.
The Benefits of Investing in Fintech
Investing in fintech offers several advantages compared to traditional investments.
- Lower Transaction Costs: Investing in fintech eliminates traditional brokerage fees as transactions are executed electronically.
- Increased Efficiency: Fintech is more efficient and requires less paperwork than traditional methods of conducting transactions.
- Greater Accessibility: Fintech provides investors with access to a wider range of investment options compared to traditional methods.
- Increased Transparency: Investors can access real-time data about their investments and get instant updates on returns.
Frequently Asked Questions
What is the best way to start investing in fintech?
The best way to start investing in fintech is to do your research and understand the various types of investments available. You will also want to consider the costs associated with investing in fintech and determine if it fits your risk profile.
What type of fintech investments should I consider?
When considering investing in fintech, you will want to consider investments such as digital currencies, artificial intelligence, blockchain technology, and robo-advisors. Additionally, you may want to consider venture capital, hedge funds, and private equity investments that focus on the fintech industry.
Are there any risks associated with investing in fintech?
Like any other investment, there are risks associated with investing in fintech. These may include lack of liquidity, risk of technological failure, lack of data security, and uncertain regulatory environments. It is important to do your research and understand the potential risks before investing.
Now is an exciting time to invest in fintech as it offers several advantages and provides access to innovative technology. With its ability to reduce costs, increase efficiency, and provide greater accessibility to a wide range of investment options, now is an ideal time to consider investing in fintech. Researching the different types of investments available and understanding the associated risks will help investors make more informed decisions about their investments.