Over the past 2 decades, financial industry evolved with the help of technology to reach out to larger audiences with diverse products. Big banks with their presence across the regions dominated the financial industry with their traditional approach. However, the traditional banking dominance is eroding with new financial ventures offering new products, service and practices that improve the customer experience. According to a 2018 joint survey conducted by University of Chicago and Northern University, just 41% of Americans trust banks. Apart from the mistrust, technological trends paved way for store wealth, send payments and protect data. These include decentralized finance (DeFi), tokenization of assets, artificial intelligence, regulation technology (RegTech) and cryptocurrencies, to name a few.
Fintechs made it easy for borrowers, depositors and creditors to do business which they could not have done with traditional banks. One such way is Peer to Peer lending. P2P lending removes the brokers from the loan transactions and directly matches borrowers and lenders via a shared platform. P2P lending is popular with Millennials and generation Z. As there are no brokers, borrowing cost are lowered thereby increasing the returns for the debt investors.
Bitcoin and cryptocurrencies have become popular over past few years owing to their secured transactions. They are promising way to send and receive frictionless payments worldwide. As cryptocurrencies are volatile, the industry has seen an emergence of income-earning tokens that allow holders to receive interest or dividends. As fintechs allow investors to earn interest from their deposits, staking or lending, the ecosystem will grow. Fintech ventures started outperforming banks with their better and cheaper services. Transactions have become seemingly easy with fintech introducing new products and make the experience better for the customer. Secondly, blockchain-powered payment systems are typically frictionless, less expensive and secure, because they remove the need for intermediaries.