Imagine the scenario: You're out to dinner with friends, and the check comes. You want to split the bill, but the restaurant only takes one payment.
How about this one: You're rushing to leave the house, and you forget your wallet.
About 10-15 years ago, these situations would've presented big issues. However, today, they present two of the most practical use cases of Fintech. Mobile payment apps, such as Cash App, Zelle, and Venmo have made scenarios such as the first one very easy to handle. Just put the whole bill on one card and have everyone send the money to whoever paid.
As for the second scenario, that is where the more modern applications of Fintech come into play. These include the transition from a physical wallet, to a mobile one. Blockchain technology has enabled credit cards, proof of vaccination, and even concert tickets to be stored electronically. Soon, you may be able to flash your phone as your ID when getting pulled over by the police (more on this later). But nevertheless, the sting of not having your wallet has certainly been lessened by the power of Fintech.
Where It Started
In order to understand where Fintech is going, let's briefly review where it started.
Although it can get complicated, Fintech is really a simple idea. Technology that is used to improve financial services. So with that definition, it's clear that Fintech is in no way a new field. Where did it all begin?
Technically, you can argue that Fintech has existed since the beginning of time. After all, the exchange of goods and services has always been fundamental to society. And in modern times, this has meant the exchange of money. For this reason, financial services has driven technological upgrades throughout history. For the sake of our discussion though, let's start Fintech's journey in 1950 with the creation of the first universal credit card.
This invention marked the first time that consumers could access finances without carrying physical currency. The innovation continued with ATM's, the stock exchange, and digital banking. Next came P2P payments with PayPal in 1998.
More recently, there has been the launch of Venmo, which began the mobile payments space. In 2009, Bitcoin, one of the most well-known cryptocurrencies backed by blockchain, was created. Finally, in 2011, Google launched it's mobile wallet, which allowed money to be managed on smartphones.
As you can see, in just about 70 years, fintech has come a long way. But where is it going next?
Recently, the opportunity for Fintech's to "disrupt" the traditional financial services industry has been the focus. Fintech startups are providing unbanked and underbanked communities more affordable and practical access to funds. Nearly everyone has a smartphone, regardless of economic status, but not everyone has access to basic financial services. So Fintech's are filling that need, and should continue to do so in the future, with banks trying to catch up.
What about the future of payments and mobile wallets? This may be where some of the best opportunities in Fintech are. Much of this is due to the pandemic. Now more than ever, people want as little
interaction as possible in their transactions. "Cash only" businesses have been forced to adapt. Mobile payment Fintech's such as Square have made this transition possible for small businesses. The future of payments seems to be an expansion on the already popular NFC mobile payment technology. Imagine being able to use Bluetooth to pay for your groceries. This expanded range for payment would mean never having to even interact with a person or credit card terminal. You simply shop, pay, and leave. Mobile payments are heading more and more toward this direction. More automation and less interaction.
As for mobile wallets, it's only reasonable to expect that they will become more advanced and secure as more people embrace them. Many states have already experimented with a mobile driver's license, and this would all about eliminate the need for a physical wallet.
How do we Get There?
If you work in the Fintech space, what can you do to drive these powerful solutions into the future?
Do you remember the rise of smartphones in the early 2010's? What sparked such a quick adoption of this technology? A big part of it was the practicality of the product. Yes smartphones filled such a critical need at the time, and that is why it was such a fast developing field.
Fintech is no different. Such a broad scope of needs can be met by Fintech companies, anywhere from mobile payments, to portfolio management. Due to this, there is not much that can stop Fintech from continuing to grow. But Fintech has gotten this far in part because of collaboration between members of the industry. Since it is such a niche field, it's important for those within the community, who understand it the most, to stick together.
Interested in meeting others within the Fintech space and growing your network? Register for a Fintech Virtual Lunch event using this link and join us. We look forward to meeting you!