Global investment in Fintech ventures in the first quarter of this year reached $5.3 billion, a 67% increase over the same time last year, and investment percentage going to Fintech firms in Asia-Pacific and Europe doubled to 62 percent. These are findings of a study conducted by Accenture when it analyzed global Fintech trends. The Global financial market has been very volatile since the UK Brexit from the EU. Since there is still hope of stability as global financial markets and investments grow rapidly, we will look at how Fintech innovations can make an impact on greater society even in the midst of any economic uncertainly and political back stabbings.
First, Fintech innovations help cut costs and greatly improve the quality of financial services. Financial technology is not burdened by branch networks, legacy IT systems and regulators. Therefore, they provide better deals to both lenders and burrowers. They also reduce the hefty fees that are levied by traditional banks to send money across borders. Fintech will get rid of the need of any kind of a third party – be it a government or a bank agency– to guarantee the exchange of physical or digital assent. The idea here is to eliminate middle man costs and greatly increase the individuals’ financial autonomy.
Fintech has potential effect on social change among people that are economically disadvantaged. In Southeast Asia, it is believed that Fintech will play a huge role in pulling more than 600 million individuals out of poverty while proving to be a rewarding venture for startups and investors. The industry is not only expected to deepen the pockets of startup founders and investors but also it will bring real social change.
Small businesses and startups contribute significantly to social and economic development by not only birthing change and innovation but also by alleviating poverty by means of job creation. In Ireland, about 5,000 jobs will be created in Fintech industry in the next five years, according to an analysis carried out by Deloitte, a professional services firm. Therefore, we expect Fintech to create more jobs and consequently, improve the global economy.
Fintech enhances remittances. In 2015, the world spent approximately $44 billion on the fees alone for remittances. Imagine $44 billion paid by people just to move their money around. The sad part is that most remittances are from the poor or working-class sending money to their families. Therefore, remittance costs have a negative impact on the poor. This social problem is so serious that The United Nations convened a meeting to look on how nations can improve remittances. Today, remittance cost is decreasing sharply; thanks to digital currency. Some of the startups in the cryptocurrency field are using remittances to improve remittances, including Remittance and BitPesa.
Fintech innovations create a good financial infrastructure accessible to new communities and all customers. While traditional financial institutions receive the big hits of economic and financial uncertainties and some even close down when it gets too hot. While markets crash, borders close and economic giant countries become “economically un-electable”, Fintech provides a kind of escape route through it’s business model, making financial services like Crowdfunding, Online banking and Remittance still accessible.
