There are lessons to be learnt as the social media network launches its own cryptocurrency
Global payments expected to grow to $2 trillion annually as innovation reshapes financing
Banks are set to lose around $280 billion in revenue by 2025 as the rise of financial technology becomes ever more prominent, according to recent figures. This year alone, the global payments business is worth some $1.5 trillion, with this figure forecast to grow to $2 trillion over the next five years as fintech turns the conventional approach to financing on its head.
Fintech is reshaping the way financial services are delivered. It’s acting on consumer expectations in terms of accessibility, convenience, affordability and personalisation. These evolving demands are driven by the digital revolution, of which fintech is a major part.
What’s more, fintech’s epic disruption within the financial services sector looks set to continue and expand exponentially. Indeed, fintech has introduced a new dimension to the design and realisation strategies for financial inclusion.
A key example of this is smartphones being used for on-the-go banking and investing, thereby making financial services much more accessible. It’s this accessibility that allows remittances to be made to support families living elsewhere, who rely on overseas income. Many firms utilise technology to link bank accounts across the world to enable faster payments, eradicating typically high conversion rates and hidden mark-ups.
In addition, fintech can provide financial advice for those who perhaps are unable to afford advice from mainstream firms. Moreover, investment in financial technology startups is increasing all the time, with traditional banks allocating 15% ($280 billion) to startups over the next five years.
As well as being borderless, making them perfectly suited to an ever more globalised world of commerce, trade and people, cryptocurrencies are ideally suited to increasing global digitalisation.
Closer to home, the Dubai International Financial Centre (DIFC) recently reached a significant milestone, registering more than 100 fintech firms. This figure shows a three-fold growth in registered fintech companies since the end of last year, representing a steep increase in 2019 as leading regional and global fintech firms opt for the DIFC as their preferred jurisdiction from which to scale their business in this region.
Businesses also benefit from fintech as it allows them to lower costs, diversify and cater to ever-evolving client expectations, all working towards establishing solid business relationships. Looking back, traditional finances meant keeping money in the bank and hoping for a return in the future. It’s thanks to fintech that the very idea of this has changed.
Indeed, cryptocurrencies have brought far more challenges to traditional finance than originally envisaged. Only three years ago, very few people were talking about cryptocurrencies outside the fintech sector. This all changed the following year when Bitcoin, the world’s largest cryptocurrency by market capitalisation, reached a record high of $20,000.
Now, more and more people are realising and understanding the inherent strengths and characteristics of digital currencies. As well as being borderless, making them perfectly suited to an ever more globalised world of commerce, trade and people, they are ideally suited to increasing global digitalisation.
I’ve been saying for a while now that there is growing, universal acceptance that cryptocurrencies are the future of money. There’s no going back; cryptocurrencies are here to stay. Consequently, looking to the future, the monumental rise in fintech in Dubai and around the world will allow more and more people to manage their finances efficiently and extremely quickly, putting them on track towards reaching, perhaps even surpassing, their financial goals.
The writer is founder and CEO of deVere Group
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