The future of banking and financial technology

Trends in banking and financial tech

The thought of money and wealth conjures up images of wads of dollar bills, or Scrooge McDuck diving into a vault of coins. After all, a few $50 notes in your wallet usually mean you’re doing alright. As financial technology changes, so do the way we interact with our finances and money.

Financial technology and the cashless society

Since the invention of the credit card, it has helped the world move from printed and minted physical money to a cashless society. This has been seen in the rise of internet ecommerce, which forgoes physical transactions in favor of cards and EFTs.

It’s not just the more traditional methods that are phasing out the money in the way that our parents and grandparents grew up with. With the advent of blockchain and Bitcoin technologies, remittance startups are emerging that offer financial services at a fraction of normal costs. This has enabled the adoption of these services at an alarming rate. And while commercial banks and financial advisors may not yet be on board with digital currencies and just see them as technology trends, they are showing extreme signs of growth.

Companies like Payd have emerged in Africa that tackle one of banking’s biggest issues: the unbanked. The services are centered around USSD technology and allow for easy interfaces in order to help those who either cannot open a bank account or don’t have the resources.

Credit cards or smartphone apps

The credit card has always been a staple of wealth (or absolute debt). This small piece of plastic with its magnetic strip allows you to purchase almost anything you want, as long as you can pay back the interest. But, it’s also cumbersome. Besides requiring a special account to use it, not all stores accept credit cards. In order for merchants to accept it, they usually need to pay a monthly fee and a high service charge per transaction. That already puts it out of the grasp of many smaller companies.

Enter mobile apps such as Zapper and SnapScan. By scanning your credit (or debit) card and entering a few details, you can pay for anything where the services are accepted. They run on QR-code technology and mobile data. What makes them more efficient than credit cards is that they’re on your smartphone, which is always on hand, and they carry a smaller service charge than traditional cards. These services first started to spring up around small markets where sellers could not afford to own or rent a credit card machine.

Now, apps like SnapScan and Zapper are accepted at major retailers, gas stations, and even when paying car guards. They are a financial technology that allows for smaller, quicker payments in a flash.

Mobile apps evolve further

When it comes to mobile financial technology trends, it’s not just about being able to pay for your coffee with your Bitcoin. There is a range of ways in which companies, specifically startups, are changing these financial services. A South African-based app, called 22seven, aggregates your banking financial information from a range of companies, credit, and rewards systems. It is able to categorize all of your transactions and create budgets all from your smartphone.

Another example is the Android app, Stash. Created as a way to easily invest in companies, this program will remove money from a selected bank account every time you purchase something. The purchase is rounded up and the difference is invested. It has other innovative features, such as investing $0.5 every day that it’s sunny.

Even though both of these examples are cashless per se, they do open up a range of possibilities to remove the use of physical money from our lives.

Many financial pundits have stated that cryptocurrencies, such as Bitcoin, are the future of finance. If you are interested in investing in Bitcoin and cryptocurrencies, read our article that highlights how you can get involved.

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