Forget the World of Cash, Credit Cards and Checks - Fintech Will Disrupt it All

Everyone is familiar with PayPal and Ally Bank. These are two early innovations in the financial tech industry that provided some disruption to banking services. But these two companies were just the beginning. Financial technology, or Fintech as it is now called, will be disrupting the entire way we humans handle our money, our budgets, and our relationships with financial institutions.

If anyone needs proof that Fintech is a rapidly emerging trend, just consider that over $14 billion that was invested in Fintech startups in 2015. Venture capitalists and crowdfunding sources know that this hot trend is going to become the most disruptive technological trend in the next several years. Here are just some of the changes we can look forward to.

Making Payments – No More Middleman Bank

Money for payments will go from cash and credit cards to computer code. Money is already digitally stored and moves with us as we move with our mobile devices. When we repeatedly shop online at certain places, our banking information is already held by those companies in order to streamline purchases. This will change even more, as new Fintech will allow us to make payments without the bank as a middleman. Banks, which have held a monopoly over all of this, with their multiple fees, will see sources of those fees dry up. Money will flow fluidly from device to vendor.

Consumer Trust in Fintech has Increased

This, of course, was the result of the financial crisis of 2008. Consumers who had always trusted the big banks, discovered that they could not be trusted. This gave a huge impetus to Fintech, as investors saw the real future in moving financial services away from the "big boys." New startups, such as Max My Interest, came to be. While the big banks made it harder to borrow and cut interest rates on savings accounts, this company was putting money to e-bank accounts to and giving higher interest rates. Alternative lending sources began to pop us as well, such as Prosper and Lending Club, along with crowdfunding startups.

As consumers continue to understand that they don't need to a traditional bank for all of their financial services, the trend toward diversification and the use of alternative financial companies will grow. And as this trend continues, some have forecasted that there will be no cash, checks, or credit cards by 2020. And those big boys who are still around will be competing on wholly different terms. Already, they are in the process of making adaptations to suit the new client's needs for efficient money management.

Robo-Advisors will Make Investing an Individual Matter

Of course, we know all about "day traders," many of whom have lost bundles of money thinking they can compete with the "big boys" on the trading floor. Well, now they will be able to. Robo-advisors can provide the small investor with all of the tools s/he needs to sharpen investment skills and make decisions based upon real-time data, all in one place. Traditional financial advisors will find their jobs phasing out, and perhaps only necessary for those very wealthy who simply want their wealth managed by a good professional. "Day trading" will become far less risky and allow consumers full control over where they are putting what small investment funds they have.

Investing and Fundraising are Substantially Changed

Suppose you would love to get into real estate investment but do not have a bucket load of cash to do so. Your traditional, conservative bank thinks you are too high a risk for a loan. Now, you can find a Fintech investment company that is allowing many like-minded consumers to pool their money to invest together in the same market niche. Companies like Patch of Land are doing just that right now. Anyone can invest, with a small minimum, usually around $5,000. The money is pooled and the profits are shared according to the percentage of investment. Social networking will provide the means by which these individual investors can come together for a common investment interest.

The Rise of Cryptocurrency

Originally a European concept, cryptocurrencies, like Bitcoin, are moving rapidly into the mainstream. Probably even more important than the advent of cryptocurrencies themselves is the "blockchain" concept – all transactions exist on a giant public ledger that any participant can see at any time. This type of transparency in financial transactions and investing is welcome, o welcome, in fact that NASDAQ is incorporating a block chain environment for its new private share-trading component.

These five innovations and disruptions to traditional banking and finance promise to turn personal finance into a much more consumer-controlled environment. With that control comes much lower costs for the consumer, and much increased pressure on traditional banking institutions to accommodate the demands of people who have lots of other alternatives now.