The Rise of Fintech: How Technology is Disrupting Traditional Banking and Finance
The Rise of Fintech:
Fintech has grown significantly in recent years. According to a report by Accenture, global investment in fintech companies tripled to $34 billion in 2018, up from $12 billion in 2014. This growth has been driven by a number of factors including advances in technology, changing consumer behavior, and increased competition from fintech companies. 1
Impact on Traditional Banking and Finance:
Fintech has disrupted traditional banking and finance in a number of ways. Firstly, fintech companies have been able to offer financial services that are faster, cheaper, and more convenient than traditional banks. For example, online lending platforms such as LendingClub and Prosper offer loans at lower interest rates than traditional banks, with faster approval times and minimal paperwork.
Secondly, fintech companies have been able to offer financial services to individuals and businesses that were previously underserved by traditional banks. For example, mobile payment platforms such as M-Pesa have enabled millions of people in Africa to access financial services for the first time.
Thirdly, fintech companies have been able to use data analytics and artificial intelligence to provide personalized financial advice and investment management services to individuals. For example, Betterment and Wealthfront use algorithms to provide investment management services at lower costs than traditional wealth management firms.2
Examples of Successful Fintech Companies:
PayPal: PayPal is a fintech company that provides online payment solutions to individuals and businesses. It was founded in 1998 and has since become one of the most successful fintech companies in the world. PayPal has over 300 million active users and processed over $936 billion in payments in 2019. 3
Robinhood: Robinhood is a fintech company that offers commission-free trading of stocks, options, and cryptocurrency. It was founded in 2013 and has since gained a significant following among younger investors. Robinhood has over 13 million users and was valued at $11.2 billion in 2020. 4
Square: Square is a fintech company that provides payment solutions to small businesses. It was founded in 2009 and has since expanded its services to include payroll, invoicing, and inventory management. Square has over 2 million active sellers and processed over $100 billion in payments in 2019. 5
To Sum up, fintech has transformed the financial industry in recent years. With the help of technology, fintech companies are able to provide financial services that are faster, cheaper, and more convenient than traditional banks. Fintech has disrupted traditional banking and finance in a number of ways, offering services to underserved markets, and using data analytics and artificial intelligence to provide personalized financial advice. With the continued growth of fintech, we can expect further disruption of traditional banking and finance in the years to come.
References;
1.https://www.accenture.com/_acnmedia/pdf-96/accenture-2019-fintech-investment-trends-report.pdf
2."How Fintech Is Disrupting Traditional Finance,"
published by Forbes on February 21, 2019. The article can be accessed at the
following link:
https://www.forbes.com/sites/forbestechcouncil/2019/02/21/how-fintech-is-disrupting-traditional-finance/?sh=467c1bce36c6
3.https://www.paypal.com/us/webapps/mpp/about
4.https://about.robinhood.com/press/news/2020/08/17/robinhood-raises-200-million-in-series-g-funding-led-by-dfe-entities
5.https://squareup.com/about
Reviewed by Azreen Bishrey
on
Friday, March 17, 2023
Rating:
