The Future of FinTech: Investment and International Money Transfer
In the past few years, the internet has become flooded with the new concept of ‘FinTech’. You have probably heard the term ‘FinTech’ used in the media and throughout the tech world. FinTech companies came into existence with a perfect storm and started to create (and maintain) lasting value for themselves. It was both the over-advertised and underrated term that industries came across in recent decades.
Initially, its applications cut across multiple banking sectors that usually operated in money payments, transfers, loans, advice, fundraising, retail banking, and even investment management. Eventually, they established their roots in other sectors as well, such as real estate, healthcare, trading, and other popular industries.
“FinTech is portmanteau of financial technology, which alludes to the creative utilization of technological innovations for designing and rendering financial services and products to both retail and commercial consumers.”
With the passage of time, entrepreneurs got more clarity about the rules and regulations governing its evolution. They switched from the traditional methodology to this modern technology for managing their accounting and other back-office operations. From an investment standpoint to insurances to money transfer, a FinTech company deals with all financial related products and services with computer programs and other technologies.
History and future of Investment in FinTech
A study of Accenture demonstrates that the pulse of FinTech has skyrocketed from $900 million (2008) to over $12.3 billion at the beginning of 2015. In addition to this, Europe encountered the most notable development, with an expansion of 210 percent to about $1.50 billion in 2014.
Growth Rate Statistics
In the worldwide investment industry, two implausible yet realistic deals have revealed the worth of some biggest FinTech companies. Worldpay, a largest FinTech company of UK, struck a deal to be purchased by Vantiv (US-listed payment processor) for $10.04 billion, whereas Pay safe secured a $3.97 billion deal to Blackstone and CVC capital partners.
From digital cryptocurrencies (Bitcoin and Ether) to blockchain, Financial Technology has driven the financial market and has closed the banking gap. It empowers you to use peer-to-peer (P2P) networks and landing apps to exchange currency without permission from any middleman or central authority. These technologies help end users skip past mediators and third-party apps to customize their use of financial products.
There have been billions of dollars of investment in hackathons, innovation laboratories, and even acquiring start-ups. Undoubtedly, the assets and technology communities are co-related with FinTech.
Venture Capital investment in FinTech has increased expeditiously over the past few years with global funding reaching close to $24 billion by the end of 2016.
Value of FinTech Investments globally (2008 – 2020)
Torbjörn Nilsson and his business partner Håkan Birging (Swedish businessmen) invested $963,856 in FinTech start-up ‘Hiveonline’, which is a decentralized financial trust platform for small businesses.
Concept of international payments and transfers
The new trend of transferring money from one country to another is booming at a consistent pace. Remittance industries which were previously controlled by sharklike banks are now growing on their own. The unbanked/underbanked sectors and startups now have a voice with FinTech. They have found creative workarounds to break down barriers and sidestep banks entirely.
It goes without saying that international banking is historically very complex and multi-layered with over dramatic regulations and high expenses. So, it comes as no surprise that many small firms are eager to pick up the slack. The explosive growth of the Financial Technology industry has encouraged cost-effective and robust methods of exchanging currency abroad.
Banks use traditional and old-school methods, which include buying a currency and then exchanging it for local currency. Conversely, almost all FinTech firms have stockpiles of cash all around the globe, making all transactions and conversions simpler& quicker.
In 2015, a FinTech company processed more than 525,000 transactions with the figures of $2.2 trillion. Alone from the US to other countries, a large chunk of cash around $133,500,000,000 was wire-transferred in the same year.
The reason behind the growth of these companies is that they offer different amenities and benefits to consumers, including lower fees, no middlemen, and lower spreads than banks. Remittance is a great way to both speed up the money transfer and establish a balance line between low-income and affluent countries.
By leveraging new technologies, business models, and procedures, FinTech companies help to develop new and better financial products/services for both businesses and customers. Companies that provided FinTech services to consumers observed¬- “how this innovative technology made a considerable difference for underserved communities and developed the new financial capabilities for businesses.”
Whether you are a startup or already have a well-established business, if you need innovative solutions associated with investment, money payments, transfers, and technology, then contact our FinTech Company in Carlsbad.