What’s Up In Fintech?
Isadora Teich wrote this article
It’s no secret that the world of finance is ready for some major disruption. It simply was not built to cope with our globalized, high-tech, and rapidly evolving world. That’s where Fintech comes in!
In the face of smart criminals armed with tech, cryptocurrency, and countless regular everyday people who remote work has empowered to be in a new country every 3 days if they want, traditional finance is struggling to keep up.
In the next decade, we will likely see big advancements in the world of Fintech that will make finance more accessible, equitable, secure, and flexible.
Let’s take a look at some companies that are already on the road to solving these problems!
Cryptocurrency is a hot topic now, with many evangelists and detractors. While it has actually been rendered illegal in China, it is being widely embraced in the US, especially in Texas.
While countless individuals around the world have taken to cryptocurrency, on an institutional level, things have been a lot slower. This is because many institutional investors have had reservations about cryptocurrency relating to security and storage.
Anchorage Digital is attempting to solve this issue with a highly secure digital-asset platform. Their platform makes use of biometric authentication, cryptographic user keys, and hardware modules.
One thing that Gen-Z and millennials really seem to be taking to is mobile banking. Countless Fintech startups and companies have popped up in the past few years. Even more traditional companies are starting to embrace it, For example, Capital One offers a mobile bank account and debit card that you can use globally to shop without fees.
Chime is an American Fintech company that offers completely fee-free online banking. Users can access their accounts online or via a mobile app. It currently has over 8 million users and is worth more than $1.4 billion.
This young London-based startup is doing something incredibly interesting. It offers a platform that allows users to directly invest in companies that are working to make an impact on climate change. The companies on their platform work in clean energy, water, and technology, as well as other niches.
So far, Clim8 Invest has raised more than $18 million in seed and crowdfunding. They say that their aim is to make investing a force for good in the world. On their site, it reads:
Use your savings to achieve tangible environmental impact. Investing with Clim8 allows you to support environmental innovation and help reach the climate goals set by the UN Paris Climate Agreement.
Currently, many businesses across the US are facing worker shortages. A combination of things have led to this. Over the course of the pandemic, more than 50 million older people have retired so far.
As of November 23, 2021, over 700,000 Americans have died of Coronavirus as well. On top of this, nearly 2 million women were kicked out of the workforce by the pandemic, and data shows that many of them aren’t coming back for a wide variety of complex reasons.
As such, many businesses are in a rush to automate as much as possible. Grabango is one example of a popular new kind of Fintech startup, which seeks to empower stores with AI-based cashier-less technology.
Grabango is focused specifically on grocery and convenience stores. It helps them keep track of and move all of their products around stores seamlessly.
It sounds like something out of a sci-fi novel, but quantum computing is already here. It is both a powerful tool and possibly an existential threat to our current financial systems. This is how IBM describes it:
Quantum computing harnesses the phenomena of quantum mechanics to deliver a huge leap forward in computation to solve certain problems. IBM designed quantum computers to solve complex problems that today’s most powerful supercomputers cannot solve, and never will.
Essentially, quantum computing can crack existing encryption standards. In the wrong hands, it could be used to manipulate existing payment systems.
That’s why Mastercard has innovated Enhanced Contactless Payments Technology. It both processes transactions ultrafast and protects them from quantum attacks.
One of the biggest goals of cryptocurrency in the early days was to give people control of their own money. If you have ever tried to transfer money between accounts at different banks, and especially internationally, you know that this can be expensive and inconvenient.
However, these days, even though cryptocurrency is more mainstream, it still goes way over the heads of the majority of people. Orum aims to make moving money easy for everyone by tapping into machine learning.
Orum enables real-time payments and can more accurately predict the risk of failure when money is moved between banks. It reduces bad transactions to help customers avoid overdraft fees and institutions avoid high return rates.
Lending discrimination has a long history in the US. Today, laws protect borrowers from discriminatory lending practices somewhat, but this was not always the case.
It was actually illegal for a woman to have a bank account in the US until the 1960s. Until 1974, it was legal for lenders to deny women loans without their husbands’ permission. In fact, denying unmarried women loans was a common practice until 1974.
On top of this, race-based lending discrimination has harmed Americans for decades. Investopedia explains:
For decades U.S. banks denied mortgages to Black families—and those belonging to other minority groups—who lived in certain areas “redlined” by a federal government agency called the Home Owners’ Loan Corporation (HOLC).
Zest AI is working to take the implicit bias out of lending, by leaving it up to their Fairness Kit. This kit utilizes adversarial de-biasing, a machine learning technique, to make consumer lending fairer. It has already been adopted by mortgage lenders, auto lenders, and credit unions.
Final Thoughts on Fintech
FinTech is always an exciting arena to explore because it is one of the sectors with the most power to transform society. Absolutely everyone at almost every level of society interacts with money in some way.
Of course, everyone will benefit from a future of fee-free and secure banking where you can access and choose what to do with your own money more easily. We see many companies pushing the limits of what AI can really do and asking difficult questions too.
For example, how much can we really automate? Can we really erase racism with AI? How safe is any information in the age of quantum attacks?
Only time will tell.
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