Whenever we hear that technology will change the world, we often want to believe that it will make things better for us – make our lives a lot easier, keep us more connected and help us stay healthier. These are the things we want to identify with. Together with social media, the internet permits us to stay connected remotely.
Is advanced technology fair?
Well, this depends on how you want to look at things. Today’s sharing economy is championed by online companies like Airbnb and Uber. Even though this doesn’t necessarily make the market seem fairer, it permits people to join, thus driving down prices. The good news that there’s one particular field where technology seems to work pretty well – finance. And shouldn’t surprise anyone, considering that conventional consumer finance has been totally unfair with the people for several decades now.
Banks have always had monopoly over financial services. They’ve managed to under-serve and overcharge consumers, and before technology nobody could do anything to alter the system. In the UK, brokers and banks across the country charge an astounding 5% in fees for cash sent. In the US, the percentage can be even more substantial.
The rise of financial technology
As conventional finance keeps underserving customers throughout the country, fintech has emerged; this field of financial technology has made quite an impact because it is not bound by any sort of archaic system such as banks or any other traditional financial institution. Young tech companies have begun innovating the virtual world of finance, and with a bit of luck they’ll soon enough take down the supreme power that banks currently own.
Very few fintech companies support conventional banks, and lots of new players are aiming to slice off a service that only a bank could provide. For example, Funding Circle is currently revamping SME lending, and Square is changing the way people make payments with credit cards. We have online payment systems like Skrill and PayPal that allow investors to send invoices and make payments, and this is just the beginning.
Financial technology is not aiming to take down traditional banks
Contrary to popular belief, financial technology is not aiming to eradicate banks. Whether we like it or not, traditional financial institutions are not going anywhere any time soon. But with the materialization of fintech, we hope that the financial sector will wake up; it needs to reduce friction levels and stop being unfair to customers if they want to survive and keep up with the competition.
One of the main goals of fintech is to make money transfers fairer. Since most banks charge up to 5 percent when people send money overseas – often hiding some other additional costs – it’s only natural for finance tech companies to step up and offer more viable solutions to the community.
Global financing and social media
Information technology permits finance to operate on an international level. On a global scale, financial markets are described as an organized information market that operate through networked computers. Without information technology, the financial market can’t react to developments happening internationally, and financial markets can’t get access to updated information in due time. The internet permits continuous access, and that’s why technology has a vital role in finance. It provides access to credit rankings and credit scores to lenders, businesses, and insurance companies that need to work with customers that are financially responsible.
As far as social media is concerned, the information technology we have access to also runs on social media. It provide details on financial institutions and it hold valuable information of all customers. Encouraging the online community to take a risk and go online is a big step forward for fintech companies. It raises awareness by persuading people that the future of finance is online.
As technology moves forward, fintech will eventually change completely the finance environment. However, the change won’t be driven by legacy players. Their systems are too old-fashioned and difficult to adapt to change. Tech startups on the other hand, have a much bigger advantage. They have finance ifa software and gadgets to makes things better and easier for the people. These are the companies that will take the lead, and the savvier we get in terms of technology, the better chances we have to use it properly in finance.