The financial technology (FinTech) industry is growing and growing at an often dizzying pace.
The breakneck pace of change is affecting the way we go about our daily lives. It also impacts how we spend, save, protect and invest our assets.
What worked well just a few weeks ago is likely to work well today too…but the savvy financial planner double checks, just in case.
The global fintech industry was already well on its way to becoming known before the Covid-19 pandemic that led to forced shutdowns in early 2020. At present, the combined value of the FinTech market is widely expected to reach just under $310 billion this year.
The number of FinTech companies and individuals impacted by the rapid advancement of FinTech to the forefront is increasingly immeasurable. However, a few examples can help provide valuable information. These days, even the average person needs to keep abreast of the future of fintech transactions.
1. Rocket Dollar: Alternative investment for retirement
Until very recently, the dominant paradigm for setting aside money for golden years was to invest in an IRA. You put your money there or in stocks, bonds, or a combination of these three fintech vehicles.
Although these investment vehicles are all proven, they do not all offer the same return on investment (ROI). Additionally, many traditional investment firms tend to take a “wait and see” approach to new opportunities such as fintech.
Significant ROI can be lost in the meantime as new offerings are evaluated.
As an example, Rocket Dollar is a leading alternative investment platform capable of pivoting quickly and taking advantage of new opportunities – think cryptocurrency or startups – or non-traditional vehicles such as l ‘real estate.
Rocket Dollar clients use their IRA to diversify their assets, always a good strategy. They also profit from profitable businesses whose only handicap is their novelty. For the more adventurous investor, it can make a lot of sense to look into emerging markets and keep your assets nimble.
2. Cash App by Square: Addressing FinTech Payment Security Issues
We were arguably on track to become a cashless society before 2020. However, the alleviation of the threat of serious illness has put emphasis on how we process and exchange money for day-to-day purposes.
Understandably, many consumers were reluctant to even use debit cards. The small number of finger swipes it took to enter a four-digit PIN into a checkout keypad proved to be too many. The increase in investment in contactless means of payment has quickly become a fait accompli.
The number of entries into the contactless transactions market includes all the heavyweight competitors you would expect. Visa, Mastercard, Google Pay and Apple Pay come to mind.
Cash App by Square is perhaps the one that may have escaped your serious consideration. Square is already a FinTech giant, but its third-party payment app is somewhat unique in that it allows customers to use their existing credit and debit cards. It even accepts Bitcoin. However, in our age of privacy concerns, the Cash App offers something that will appeal to many, and that is the ability to make payments to other Cash App accounts anonymously.
3. Samsung: Improved reliability via Blockchain
Well-publicized data breaches may have done even more damage to consumer confidence than the Covid-19 pandemic.
That’s saying a lot, of course, but it’s safe to say that for FinTech in the coming year and beyond, there needs to be a coordinated focus on strengthening privacy and security. Consumers have finally spoken up and demanded that they control who has access to their data and that companies succeed in guarding against asset and identity theft.
Additionally, consumers burned by data breaches are showing a growing willingness to return to writing paper checks. They prefer to do this than to jeopardize considerable financial assets. The early days of FinTech may have looked a little too much like the Wild West of the 1800s. Today, consumers are all too ready for law and order to come to the FinTech frontier. Enter Sheriff Blockchain.
Investors come to admire Blockchain’s Immutability
Blockchain represents an unbreakable method of moving money and assets across the internet. The enhanced security was enough to garner big investments from Walmart, Microsoft, JP Morgan, Amazon, and PayPal, among other heavyweights.
In a nutshell, blockchain technology represents sharing, immutable, and permanent record of legitimate financial transactions. Tied by a peer-to-peer network, the blockchain is impervious to server failures and (perhaps most importantly) bad actors.
South Korean conglomerate Samsung stands out for its early adoption of blockchain. He also concocted creative ways in which they brought new products and platforms to market. Powered and secured by blockchain, Samsung has already set up an enterprise platform which they call Nexledger. They have also developed an e-wallet for Galaxy phones. Cello Trust is a blockchain platform that traces shipments throughout the supply chain.
Assuming Samsung is able to substantially increase profits and reduce losses using blockchain, expect other major players to quickly jump on board.
4. YOLOrekt: Using Machine Learning to Gamify Actions
Many people of retirement age or rapidly approaching retirement age may still be hesitant to embrace AI after seeing Stanley Kubrick’s “2001: A Space Odyssey” in theaters. For a slightly younger demographic, AI and ML might conjure up images of Skynet computers building armies of murderous robots with Austrian accents.
However, these same tech-averse people seem to appreciate the convenience of their smartphones. They don’t mind using website chatbots at all. They like to use devices that “learn” how they generally interact and make suggestions based on their usage patterns.
It’s also a safe bet that even if they’ve seen too many sci-fi movies, the average investor would be thrilled to learn that AI can help them increase their financial return on investment. About a year ago, a company received $1.75 million in funding to bring AI to the investment world.
YOLOrekt relies on stock gamification to predict prices and has garnered considerable attention in FinTech. The software is pretty much the equivalent of an “informed bet”, so the results are by no means guaranteed. However, the interface makes stock betting easy and fun for everyone.
The (likely) future of FinTech
The past two years have been sobering in terms of infallible predictions. However, the four major trends illustrated above are almost certain to gain momentum in the months and years to come.
Consumers don’t want to miss out on profitable investments just because they don’t “fit” into a traditional portfolio. They don’t want to compromise their safety either. Instead, they seek to do business with companies that protect their assets and their privacy. They want to partner with providers who use technology responsibly to make their lives more convenient and prosperous.
Image credit: Anna Nekrashevich; pexels.