Those in the payments industry are saying big changes have begun. The dominance major banks, credit card companies and financial giants have had for decades is starting to fade. In fact, Forbes says that “we are witnessing a once-in-a-generation shift in the financial services industry”. The fintech revolution is completely transforming the way banks and payments companies win and retain customers.
Since 2014, investors have devoted $130 billion in new, ground breaking technologies like mobile payments. Concerns over data and privacy and regulatory changes have also impacted the payments industry. These new payment methods have led to new opportunities (e.g. alternative lending options like cash advances and chargeback insurance providers) and an increase in economic activity by the unbanked and underbanked, since they bypass banks and credit cards.
Here are five key reasons why fintech will continue to disrupt major financial institutions and transform business models:
New Market Opportunities
A $100 trillion plus market, the global payments industry consists of large and small companies. All of them are fiercely competing for retail, peer to peer services and e-commerce. Startups developing Blockchain and smart contracts are redefining the relationships between customers, suppliers and vendors – creating new market opportunities.
Rising Global Private Investment
Over the past four years, $130 billion has been invested into fintech. In the first half of 2018 alone, there has been 800 fintech investments.
Changing Consumer Behaviours
The changes in consumer behaviour has been a driving force in the transformation of the payments industry. Mobile, messengers and P2P models have overtaken traditional processing, offering cash-less and card-less payment solutions to consumers.
Blockchain is Making Waves
While Blockchain will reshape many industries, it will have a huge impact on the payments industry – upending financial institutions. It can not only bypass financial institutions altogether, but also allow for direct payments between parties.
Increased Access to Data
The European Union PSD2 directive weakens banks’ hold on consumer data. With permission, merchants and processing companies can now access customer account information directly, which makes the payments more efficient and speeds up the process.
Over the next few years, industry experts say we can expect to see a similar directive adopted by other countries. If your business needs more payment processing information, consider the helpful reviews and information Best Payment Providers has to offer.
Author Bio:- Payment industry expert Taylor Cole is a passionate merchant account expert who understands the complicated world of accepting credit and debit cards at your business. His understanding of the industry and chargeback insurance providers has helped thousands of business owners save money and time.