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  • AutorenbildMako Muzenda

The future of fintech








The marriage between finance and technology is not a new phenomenon. According to a 2016 paper by Arner, Buckley and Barberis, the use of technology for financial services dates back to as early as the 19th century with the first transatlantic cable in 1866. From telegraphs as early forms of electronic transfers, the invention of credit cards and the Society For Worldwide Interbank Financial Telecommunications (SWIFT), to the creation of PayPal and digital banking, fintech has gone through cycles of invention and disruption. What’s next for fintech, and what new ways can technology change our perceptions of finance?


The current era of fintech is defined by innovation and experimentation. From start-ups to banks and established institutions, there’s a drive for new ways to combine finance and technology. Created after the 2008 financial crisis when trust in established financial institutions plummeted, new fintech companies and ideas addressed a desire to rethink finance and its relationship with businesses, consumers and regulators. Mobile payment services such as ApplePay, digital wallet services such as PayPal and e-banking platforms have become mainstays in the past decade. According to the 2019 Ernst and Young Global Fintech Adoption Index, China and India have the highest usage of fintech, with a reported 64% of the global population having adopted fintech in some form. With a steady decrease in the use of hard currencies and the rise of the cashless society, financial technology is now a fundamental part of modern life.



Looking into the crystal ball, what does the future hold for this multibillion-dollar sector? Global fintech is set to surpass €371 billion worth of value by 2027. Advances in automation and machine learning will drive innovations within the field, whilst also making fintech services more affordable and accessible globally. As a mix of new companies and established organisations continue to invest in fintech and expand consumer bases (such as Klarna, Wise and Ant Group), fintech is becoming more ingrained into global finance. As a 2021 UNEP report on fintech and sustainability explains: “The very distinction between finance and the real economy will become blurred as fintech embeds finance at the core of an increasingly automated global economy with seamless two-way communication.”

Why Central Bank Digital Currencies could be the future of digital currency. Read more here.


One of the avenues being explored is blockchain technology, specifically Central Bank Digital Currencies (CBDCs). With ongoing research and testing into the implementation of CBDCs in the Euro zone, the United Kingdom, Japan and Canada (with the United States Federal Reserve exploring how to digitize the Dollar), CBDCs may become the dominant form of digital currencies. For consumers and Small to Medium Enterprises (SMEs) still wanting to access finance without the use of central banks, improved access to different platforms and lower costs will, according to UNEP, accelerate “the integration of the financial and real economy, enhancing opportunities for shaping greater decentralization in the transition to sustainable development.”

With investment, research and interest in fintech increasing, the future of the sector looks robust. Ghazan Global supports innovation in fintech through investments and partnerships.


REFERENCES:


Arner, D. W., Barberis, J. N., & Buckley, R. P. (2015). The evolution of fintech: A new Post-Crisis paradigm? SSRN Electronic Journal. doi:10.2139/ssrn.2676553


Castilla-Rubio, J., Zadek, S., & Robins, N. (2016). Fintech and Sustainable Development: Assessing the implications - summary. Retrieved January 25, 2023, from https://wedocs.unep.org/bitstream/handle/20.500.11822/20724/Fintech_and_Sustainable_Development_Assessing_the_Implications_Summary.pdf?sequence=1&%3BisAllowed=


Kent, R. J. (2018). Investing in Innovative Fintech Solutions. In The Role of Technology in Addressing the Global Migration Crisis (pp. 5–7). Centre for International Governance Innovation. http://www.jstor.org/stable/resrep28844.9


Marino, K. (2021, July 16). The pandemic fueled the decline of cash. Retrieved February 9, 2023, from https://www.axios.com/2021/07/16/legal-cash-economy-decline-pandemic


Pashang, S., & Weber, O. (2021). Fintech and the SDGs. In Fintech for Good: Governance Mechanisms for Sustainable Development (pp. 2–3). Centre for International Governance Innovation. http://www.jstor.org/stable/resrep35555.6


Photo by CardMapr.nl on Unsplash

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