Digital technology has transformed every aspect of our lives, including one of the most fundamental ways we humans organize ourselves: money.
Financial Technology (FinTech) has been responsible for tremendous advances in financial education, investment advice, payment processing, and smarter regulatory compliance. It’s also brought about a quiet democratic revolution in the financial world, putting more information and more power in the hands of everyday people.
FinTech can literally put this information and power in your hands thanks to mobile technology, integrating financial best-practices into the everyday lives of consumers. This integration is crucial for making good habits, and for making good habits stick. Apps like MoneyStream are designed to organize and simplify your daily finances by giving you the data you need to make informed choices, while automating select monthly functions. Other apps like Mint help you automatically generate a budget based on your real-time spending habits. By seamlessly integrating financial management into everyday life, FinTech has helped make personal money management less of a dreaded one-off chore and more of an approachable routine.
FinTech has also ridden the wave of interconnectivity that has come with the rise of mobile technology. Apps like Uber let people share their cars, AirBnB lets people share their homes, and now new digital services are helping people share their finaces too. Peer-to-peer financing services like Lending Club and Prosper use FinTech to connect borrowers with investors directly, bypassing larger institutions to help keep interest rates low and investment returns high. These services build both customer connectivity and competition in the marketplace, providing more flexibility and options for making money, saving money, and spending money.
The FinTech revolution has also dramatically reduced the cost of entry for creating new financial organizations – big banks and credit unions are far from dead, but new players to the scene can compete without needing to match the bigger fish in terms of size and scope. Smaller companies can deliver specific and targeted solutions directly to consumers with minimal overhead.
In much the same way as major film and cable content providers have seen their market shares challenged by cheaper and more focused alternatives, so too will larger financial institutions find themselves challenged as more and more customers find new ways to meet their needs. FinTech’s disruption will mean that bigger companies will have to be more and more proactive to continue to maintain their status, ultimately leading the way to an improvement for everyone. Whether you’re an early-adopter, a late-adopter, or even just waiting to see, FinTech’s revolution will make the world better for you too.