Fintech 3.0 has revolutionised the financial world by taking banking and finance to consumers’ phones. But what does the growth of neobanks mean for the banking sector and new-age banks? Fintech is not a new concept. Fintech 1.0 saw the emergence of the transatlantic cable in 1866 and the introduction of one of the most used plastics in today’s world, the credit card, in the 1950s. It has been an ever-evolving concept since it saw the rise of the world’s first digital stock exchange and ecommerce businesses.
By the beginning of the 21st century, most banks’ internal processes were fully automated and digitised. Fintech 3.0 witnessed the creation of many online payment apps like Google Pay, and revolutionised the financial world.
The impact of fintech in our everyday lives is unavoidable. To understand the depth of its impact, one simply needs to look at how things worked in the past versus now.
Just a few years ago, you’d have to go to the bank to look at your bank account and get a statement. In order to send money across, a minimum of three days were required, which made payment processes slow. Now, you can get all the information regarding your bank account at the tip of your fingers.
Online banking has changed how things work in the banking sector. Not only that, but instant money transfers are the way to go.
Payments are done within minutes if not seconds. If you were to focus on India, you’d notice more and more shops in cities and suburbs now accepting online payments. Smartphones have become a huge contributor to the advancement of fintech.
Fintech 3.0 was fueled by the global financial crisis of 2008. It exposed some serious problems and weaknesses in financial regulation and services. Fintech stepped in with a solution and is continuing to rapidly revolutionise the banking systems across the world.
Fintech’s growing impact
One of the biggest advantages of fintech is its availability. It provides technology that can be used from anywhere in the world. It also has proven to be a more effective and cost-efficient way of banking. Not only does it cut down the need for physical banks – reducing cost, but it also reduces the possibility of error since the processes are all automated by various algorithms.
Fintech companies focus on providing unique solutions to fill the gaps of financial need at a more cost-efficient budget than traditional financial institutions.
Many fintechs have also focused on providing financial education, which helps people manage their money and finances better – helping them reduce their debts and teaching them the importance of saving and investing.