Money is gradually shifting form. From cryptocurrency to Web3 to Defi, the financial world is evolving speedily.
And our relationship with money is changing: from how we use it to structures we trust to keep it and how we treat it as customers. As a result, financial services providers, from wealth management to banks and insurance, struggle to keep up.
The majority of these new trends result from evolving technology. Others are the result of a renewed emphasis on the consumer. To take a closer look at how this is happening, here’s a breakdown of three game-changing trends that could impact the financial sector in the coming years.
Blockchain Acceptance in the Finance Industry
Blockchain technology has long been synonymous with cryptocurrency, and experts believe the technology will only become more fused with existing and future financial systems. Why? Banks could conduct less expensive yet efficient transactions with the blockchain while maintaining customer security. It can also handle peer-to-peer lending, which is expected to reach $145 billion come 2025.
Plus, in 2023, more banks will upgrade to cloud-based banking. Blockchain tech will lend a hand to this. What’s more, blockchain is being used by more than just banks. For instance, various companies actively utilize Blockchain technology in forex trades.
This makes one wonder: will online platforms ever integrate the use of cryptocurrencies to place bets physically and online? Several cryptocurrencies like Bitcoin, Bitcoin cash, Ethereum, Ripple, etc, are used to place bets and receive payouts on betting apps.
With more and more states in the US adopting sports betting, several betting platforms are beginning to accept cryptos as a form of payment, thanks to its increased convenience. Ohio is the latest state on the block to apply for its license and is set to become one of the biggest online sports betting markets in America from January 2023. If you are a big fan of sports betting, you could learn more about Ohio sports betting apps and become a pro ahead of the launch.
Besides sports betting, users can also use blockchain currencies to make payments on platforms like Paypal and Mastercard. Of course, this involves cryptocurrency, but it shows banks’ willingness to accept blockchain.
E-money is on the Rise
Suppose you missed this train, Newsflash! Money has officially gone digital. Anyone can now pay for goods and services by scanning their phone or tapping a screen in a store. People in China can even pay by smiling, thanks to a facial recognition service called “Smile to Pay.” Physical money isn’t so important these days.
In essence, digital money is money or payment in any form that exists only electronically. This can be something as simple as online payment or money transfer. A credit card company or traditional bank usually facilitates these) or when complex cryptocurrency such as Bitcoin (which generally sits outside traditional money institutions) is involved.
Credit cards, apps, online banking, smartphones, money transfer, and cryptocurrency platforms are all forms of digital money, and the majority accepts them. The key point is that no physical money is exchanged.
The Rise of Finance Apps
Mobile payment apps and “digital wallets” are paving the way for this new wave of electronic money.
This trend is significant because traditional banks provide few apps and services. Instead, they are pioneered by tech giants and digitalnative startups like Google, Apple, Samsung, and Elon Musk’s PayPal. This breed of fintech providers, powered by data and AI capabilities, threatens traditional banks and financial service providers’ long hold and monopoly over money and payments.
In 2020, PayPal-owned Venmo processed over $155 billion in payments, a 59 percent increase from 2019. This would take a traditional bank many years to achieve, and processes like these are predicted to get even faster up. Apps are also making inroads into unsecured lending through BNPL services. For instance, Klarna, a buy-now-pay-later digital payment system taking the millennial community by storm. These will shake the market and take shares away from lenders and high-rolling banks.
Finally, Is An Exciting Future in View?
The financial services industry is rapidly changing. These three trends will only accelerate this evolution, redefining the sector dramatically between 2023 and 2025. The rate of change is so rapid that financial institutions cannot afford to lag even for a moment.