Financial regulations are in place to make the markets safe and secure. Since the economic downturn, policy-makers have tried to ensure that what happened in 2008 will not happen again. The financial downturn also brought another force into the spotlight – the tech revolution. Venture capitalists and start-ups have for the past years disrupted industry after industry, from transportations services like Uber and Lyft to communication services such as Slack. Recently, a variety of firms are looking at ways to make finance more efficient, safer, and more beneficial to its customers.
These financial tech firms, or Fintech, are changing finances in a variety of unique and helpful ways. One major innovation is known as crowd funding or peer-to-peer lending. The concept behind crowd funding and peer-to-peer lending companies is simple. An individual or company that has a unique idea no longer has to go to a bank to apply for a traditional loan; they can now take their idea to everyday people who can fund the idea or concept bit by bit. Usually the person or company pitching their idea or product to the masses will provide a benefit to those early backers. For example, a bar recently funded by crowd funding offered free beer to its first backers who gave over a certain amount of money to make the bar a reality.
Another popular Fintech firm is Venmo, which allows the transfer of money from one individual to another without any fees. Robinhood allows people to buy and sell stocks without a fee, as well. Mobile devices and the apps that fill them are putting more independence in the hands of consumers. They have more choices in how to finance projects or transfer money.
In 2013, Fintech firms only attracted around four billion dollars in investments. In 2014 they were able to attract 12 billion dollars. In fact, several traditional finance firms are concerned about the sudden increase in Fintech firms. However, compared to the giants of finance, these firms are small in comparison.
These Fintech firms also use big data to evaluate risk. Pulling from a variety of sources including social media, these startups can gain a better picture of how an individual or company is actually doing. This is important, and other companies should take note. The use of more and more date to make informed decisions is beneficial to all financial firms. Although the full effect Fintech firms will have on the financial industry at large is still unknown, their creation shows a shift from large firms to efficient smaller firms.
No matter how the market changes, Cambridge Realty Capital is positioned to use these advancements to ensure your financial future is safe and secure. Accessing big data and utilizing advancements in financial services in order to best serve out customers is what we are all about.