You have probably seen the news about all of the websites we use almost every day, going into fintech and developing either their own cryptocurrencies or collaborating with a financial institution to offer their clients a payment system that will center around this particular website with no need to involve third parties. Google, Amazon, Apple, and Facebook are definitely one of the most well-known companies in the world that doing just that. As fintech startups are getting more attention and funding all over the world these giants are trying to catch up and get the most benefits they can out of fintech, while also enhancing the experiences of their customers, or so they say.
Beyond Silicon Valley
Fintech startups are now distributed all over the world. Silicon Valley is no longer the only place where these innovations are happening. Kenya has been establishing its name as Subsaharan Valley, with its multiple “Unicorn” startups- worth more than $1 billion each.
Not only are these major companies looking to extend their businesses into the financial sector, banks, and other regulated financial institutions are also looking to modernize by responding to their customer’s needs and delivering on tech innovations. This is a mutually beneficial movement that will help make the payment process easier for the users but it’s not without its complications. Technology has become a part of almost every industry starting from the fashion industry in Kenya to betting sites in Norway, making it a part of our everyday lives.
Facebook launched its cryptocurrency libra and since then has been struggling to keep the partners meanwhile attempting to get the government’s approval and trust for the global cryptocurrency.
Fintech boom has been clearly taking over the world and its good that these companies are already thinking about self-preservation. Because mostly for the banks, it’s inevitable that unless they embrace fintech innovations and new ways of carrying out transactions they are doomed to be left behind. As the Forbes articles noted, back in the early 2000s we used to think about technology as its own industry. Technology has always been its separate field and remained largely untouched by other industries. Today, every company is a technology company. And the same goes for financial services.
Every week you see news about the new Non-financial firm entering the field of technology. These companies see their large followings and unique insights as an advantage to capitalize on this and offer financial services. So the line between tech companies and the regular companies is becoming more blurred. Since most of the people would have trouble imagining their lives without technology it’s becoming less of a separate field and more of the necessity for every company.
The Fintech Revolution
Often framed as the “Fintech Revolution”, this movement is not only benefitting these big companies and the privilege. Democratizing financial institutions is one of the most efficient ways to deliver financial services to the “unbanked”- the group of people that for one reason or another don’t have access to traditional banks and their services. From off-grid villages to big city residents, these new financial technologies are accessible for anyone.
Alternative sources such as utility bills and predictive information help the companies to understand their customers better. While collaborating with regulated financial institutions makes it possible for these transactions to happen, and the companies don’t actually have to acquire the necessary licenses. The mutual effort of the non-financial companies with financial institutions using technology makes for the impactful innovation that holds the power to change the everyday experiences of a lot of people.
But as mentioned before, these services being so readily available and easy to access also means that there’s a higher chance of exploitation from the company’s part, which is why the role of the regulators should be emphasized and companies who have a poor record of taking care of their customers data should be challenged when they bring forward an idea that could potentially make its use a vulnerable group.
There needs to be proof that these technological advances will be harnessed for good and won’t act as a coverup for major crimes and exploitative procedures. The trust for these companies launching their financial services varies with Amazon having the highest percentage of trust from the people, followed by Google. then Apple and Facebook. People need a more transparent view of what processes go into their data collection and how it can be ensured that people aren’t handing over the information that could be used for advertising intelligence or for other more malicious services.