Investopedia defines FinTech as a “portmanteau of financial technology that describes an emerging financial services sector in the 21st century.” In other words, FinTech is the use of technology to support electronic banking and financial services. With the ongoing increase in the use of technology, FinTech is a crucial part of the business world. In order for a business to succeed in this day and age, the art of financial technology must be mastered. Here are some of the leading FinTech trends of 2017.
Instant Electronic Payments
A major FinTech trend is instant electronic payment. With PayPal being one of the dominant leaders in the peer-to-peer payment platforms, other companies have begun to create systems of their own. A subsidiary of PayPal, Venmo, LLC, has become very popular amongst millennials, as it allows an incredibly simple transferring of funds from one account to another. With its user-friendly interface, people have an easy time sending money to one another, whether it be a large amount for a good or service, or to split the check at a restaurant.
Accounting Software Automated
For centuries, companies have hired skilled personnel to do the accounting and business keeping for them. Recently, FinTech startups have created softwares to make accounting automated, rapid, and surprisingly easy. An example of this type of software that has grown over the past few years is Quickbooks by Intuit. This software allows the user to connect the company’s bank accounts to the application; from there, most of the data entry from the user becomes unnecessary. The application includes features such as categorization of expenses, profit and loss reports, learning the patterns of the user, and much more.
Marketplace Lending for Real Estate Investors
Essentially synonymous to P2P lending, marketplace lending (MPL) is the process of matching lenders and borrowers with each other through online programs. Marketplace lending has recently become popular due to people losing trust in traditional banking after the recession in 2008. MPL gives an individual, who may have not had prior access, the ability to take part in the investment of a property, whether it’s getting a hard money loan for a fix and flip or to crowdfund a real estate project.
This trend is continually growing and is advantageous for its users due to its financial incentives and availability of credit where it was limited in the past. An online platform, such as Sharestates, enables its users to invest in real estate online and reap the benefits.
In addition to accounting softwares, blockchain is another useful method for measuring financial transactions, specifically in real-time. A sizable issue with digital currency is something known as double-spending. An electronic money transaction is essentially a line of code that can be accessed to represent a dollar amount. This code can be duplicated, and the money can be considered double-spent.
Blockchain technology, first used by Bitcoin, provides a database of electronic financial transactions that does not allow an exchange to go through unless approved by its extremely complex software. According to chargebacks911, wider adoption of blockchain technology could potentially help banks save as much as $20 billion annually by 2022.
The Future of FinTech
FinTech is relatively young and will continue to be integrated into all aspects of the business world. Whether it is used for a simple task like transferring money, or something greater like accounting and tracking budgets, financial technology is a crucial part of the work field. Every year there are new trends to be monitored and followed in order for one’s enterprise to be as successful as possible.