We constantly hear about the need to change behaviours, how to build technology to make the world a better place. But how can it be done? When it comes to the financial world we often think of it being a huge machine, where implementing dramatic change is nigh on impossible, where small changes come over a long period of time, after lots of discussions, strategy meetings, and a lot of red tape. By focusing on innovation to create economic and social change, moving away from traditional financial models that focus on profit, millennials are changing the world of finance.
With all the bad press that the financial services industry has been getting, there’s certainly a negative view that many of us hold. Banks issuing bonuses, playing fast and loose with our money, caring primarily about profit before delivering a good service. At least that’s what the press might have us believe. Banks are spending significant money on advertising, trying to improve public perception, but they’re falling behind in terms of their willingness to innovate and adopt new technology, creating better digital experiences for their customers.
Larger institutions are often slow to react and even slower to implement change, when new technology becomes available. But to be fair, with the world of digital is in a state of constant upheaval, and it can be hard to keep up, and even more difficult to identify what will be a passing fad and what’s going to become a game changer. Click here for a good article on this.
The problem is trying to find suitable ways to use technology as a means for change, both in ways that make life easier for us to manage our finances, but also in ways that benefit the world.
Enter the millennials
The financial industry is full of tech-savvy people that have identified problems with products, user experience or efficiency issues, and want to solve them. A growing number of these millennials have grown tired of working for the banks and are branching out on their own, which offers them the chance to develop AND implement new financial tech solutions much faster than if they tried to wade through all the bureaucracy they’d encounter working at a larger organisation.
So lets have a look at some digital solutions that are seeking to change the world of finance, help us take control of our money, and seek to deliver positive economic change in the developing world. There’s growing calls to utilise digital monetary transfers to simplify moving money around the world. World Remit is just one example of how millennial’s are using mobile tech to make it easier for people to send and receive money, but by avoiding middlemen they are also able to avoid agent fees, making it cheaper and faster to send money too.
Another example of Finch led change is the UN’s Better Than Cash Alliance, which promotes digital payment systems as an alternative to cash. Traditional methods of banking exclude many of the people in the developing world, as they focus more on profit. In fact, 2.5 Billion people worldwide lack access to formal financial services, so a system of digital payment would have an enormous social and economic effect. Digital systems are easier to run and are far more inclusive, particularly for women, whilst being more transparent. Watch this video for more information on the Better Than Cash Alliance.
A major obstacle that Fintech faces in delivering change is in uptake. You can create a product but convincing people to adopt new technologies, particularly as an alternative to cash is another problem in itself. The transition requires significant investment to develop the necessary infrastructure. It also depends on collaborative efforts between governments, NGO’s and private industries. It will take some time to deliver the sort of change that they aim for, but we know change does happen, and the social impact will be great. People were sceptical of contactless technology when it first came out but only a few years later we now have contactless payments on the tube, in nearly every café and its accepted as just another way of conducting a transaction.
Enter the bitcoin
There’s so much talk online about bitcoin, but hardly anyone seems to know what it is. Briefly speaking it’s a form of digital currency that is decentralised, has much lower transactional fees and the fact that all transactions are stored in a database called the blockchain means that all bitcoin transactions are recorded. There’s also no risk of all the data being lost, as maintenance of the blockchain is performed by a network of communicating nodes running bitcoin software, disruption of one node has no effect on another.
Could bitcoin create a new world with one digital currency? Time will tell.
We’ve already seen how the challenger banks are slowly becoming a threat to the high street banks in terms of web design and digital presence, their smaller size means that they have to push to deliver better customer experience. As more millennials set about creating innovative Fintech solutions to the worlds economic problems, it’s worth noting that the unless larger financial institutions start to focus on change and innovation, they face a serious challenge from smaller, faster-moving groups that can deliver more efficient digital solutions. In the world of digital, size doesn’t always matter.
Image courtesy of https://www.betterthancash.org/