A. Gostatuto g. 40, Vilnius, LT03163, Lithuania
Fintech is nowadays an integral part of our daily lives, starting from conventional use of pay pass technology to the exploitation of mechanisms for sophisticated data handling and processing. The massive spread of technological advancements to our daily lives continues to revolutionize even the simplest routine tasks, but especially the sector of financial services. Over the span of the last five years $31.6 billion have been invested in fintech in the US, and other $18.1 billion on the global scale, which brings it to the spotlight of the technological advancements worldwide. You are sure familiar with such names as Intuit, PayPal, Square, and other startups like Plaid, Kabbage or Robinhood that are changing the essence of world’s financial industry. In this article we want to provide you with a list of fintech opportunities that may be interesting and attractive for both, experienced entrepreneurs and young businesses.
1. New way to manage personal finances
With the rapid evolution of fintech, it became possible to effectively manage personal finances even for people with no or little expertise in the field. The market is currently offering a variety of tools, such as automatic budgeting, finance planning, and asset management services that greatly simplify and optimize the relevant processes.
Intuit Inc. has been leading in the sector of personal finance. Among its main offers is Mint.com, which was created to allow users to keep track of their bank account activity, credit cards, investment, loans, and transactions. As simple as it gets, all within a single app. Another similar app is Level Money, which also makes it possible for clients of 2,500 banks in the U.S. to connect their account and control personal finances. Company representatives claim that their goal is to develop next-generation banking experiences and make it accessible to the masses. Despite such advancements and digitization trends, there is still room for improvement and creation of even smarter and high-tech solutions for personal finance management.
2. Simplified accounting for small businesses
The sector of personal finance management has been developing rapidly, but it is not the only one that has received attention. Professional accountants are now also able to enjoy the benefits of digital innovation, particularly when it comes to bookkeeping. Pen and paper and Excel sheets are in the past, managing business finances is being subject to a large-scale digitization. The shift towards cloud SaaS technologies has made accounting faster, more secure and affordable. For instance, Wave offers free instruments, such as invoicing and payroll services, for small businesses and freelancers, that help such entities optimize the management of their accounting procedures. This and similar game-changing alternatives to expensive and sophisticated solutions designed specifically for enterprise are conquering the market and changing the existing trends.
3. Innovative ways for payment execution and money transfers
Innovation here mostly contributes to higher transparency along with lower costs of the services. eCommerce has also become increasingly widespread, and it is projected that about 5 billion people will be making smartphone payments by 2019. There is a range of developments that promote such trends, such as mobile payment systems, hardware devices processing credit card payments, and alternative money transfer services. All of the latter aspire to meet the needs of modern consumers for faster, cheaper, and simpler payments processing. The fact that such major tech companies as Apple and Google have also become interested and taken action promoting mobile payments also raises the potential of the technology.
4. New-generation microfinancing and lending
Banks often fail to satisfy the needs of clients who are looking for disintermediation of the crediting process. Peep-to-peer lending platforms instead succeed to connect loan providers with potential borrowers through their specialized P2P solutions, making consumer and business lending easy to access and convenient. Microfinancing is mostly dominant in the developing countries, and is therefore a vast field of opportunities for fintech. Many firms active in the sector apply a multidimensional approach and combine lending and payment services, offering alternative financing options. Some also provide installment loans, which give users the opportunity to purchase goods from a number of online eCommerce platforms.
In any case, the full potential hidden in this field is yet to be discovered.
5. Online trading and investment opportunities
It is not only banks that are experiencing digitization, but also markets and exchanges. Nowadays, online trading has become simple and accessible thanks to a range of intuitive and cheap mobile apps. The advancements in the field of robo-advisors also help users make thoughtful and beneficial decisions related to investment. Machine learning and AI technologies are being adopted on regular basis in different areas of digital activity. These developments have numerous benefits for the fintech industry, enhancing automated and personalized service, providing deep data-backed insights and so much more.
6. Innovation implemented in crowdfunding
The total sum that is being annually raised on the crowdfunding platforms, like Kickstarter and Indiegogo, is somewhere near $3 billion. This became possible due to the JOBS Act adoption in 2012. This piece of legislation was drafted to impose regulations on equity crowdfunding in the USA and to push forward the creation of a friendly business environment for the emerging startups and small companies. In simpler words, the non-accredited investors, meaning regular citizens, are now granted the opportunity to take part equity crowdfunding projects and invest in any related venture. This is rightfully perceived as a significant breakthrough for new start-ups, as it multiplies their opportunities for growth and development.
7. Big data and analytics updates
Advancements made on these two spheres continue to modify and revolutionize the fintech industry. Worldwide famous institutions such as Goldman Sachs, Morgan Stanley or Bank of America, are currently in a search for new ways for data application, as the information they have managed to accumulate over the years is definitely hiding something interesting.
Data science start-ups are being massively invested in by the giants and major companies in the business world. One of the outcomes was the development of an innovative machine learning platform that operated to prevent fraud in the sector of eCommerce.
Taking into consideration the fact that fraud prevention and risk management are some of the key concerns of the fintech industry, investing in big data and analytics technologies development may definitely be perceived as useful and relevant.
8. New-generation insurance options
In the US the insurance industry generates about $696 billion in revenue, which makes it the largest one in the world. However, the national market is quite hard to be entered, due to the high complexity and a range of regulatory nuances and constraints. Insurtech, though, has been developing worldwide with the support of leading investors such as Google Ventures, Google Capital and Goldman Sachs. The industry applies technology, data, and innovation in order to enhance the experience of individuals who use health insurance experience, additionally making it widely accessible.
9. Blockchain and digital currency
We have finally arrived to the superstar of the list that builds on the decentralized ledger technology and peer-to-peer networking. Many wrongfully consider blockchain only applicable for crypto-currencies, yet this is not the case. Blockchain creates a competitive ecosystem that can be introduced to a variety of spheres, considering all of the above-mentioned, such as payments, funds transfers, lending, trading, and so on. Besides, there are companies that promote blockchain-based infrastructures and API services, which can be of great use for financial companies. They create a possibility for a better connection within the global financial network, as well as for its digitization.