The growth trajectory of cryptocurrencies over the past few years has been remarkably impressive since the evolution of the Bitcoin in 2009. In 2019, the cumulative market capitalization of cryptocurrencies grew by $109.32 billion to $237.1 billion, from the 2018 value of $128.78 billion, with Bitcoin alone hitting a total value of $144.96 billion. The disruptive potential of cryptocurrencies to transform the global financial landscape has led to its evolving widespread usage in the provision of financial services.
With the not-too-surprising interest of fintech companies in leveraging the use of cryptocurrencies and blockchain in the provision of improved financial services, there is almost no doubt that the future of finance would feature an inevitable fusion of cryptocurrencies and fintech.
In 2019, European fintech giant, Revolut, had a whopping £93.3 million worth of crypto assets held by its customers, from its 1 million active crypto clientele. The fintech unicorn, which currently supports six cryptocurrencies, also owns its own cryptocurrencies, and offers crypto services for its customers. Gradually, the company is progressively weaving cryptocurrencies into its stack of financial technology service offerings.
In the United States, several fintech firms, like Square and PayPal, are already integrating crypto services into their stack of fintech services, with Square’s Cash App and PayPal’s Paxos, amid others, promising to merge cryptocurrencies and fintech to advance the landscape of global finance.
The exploration of a possible elegant intersection of fintech and crypto is rooted in the search for a solution to the dysfunctionalities and limitations that are associated with financial organizations and their products. A lot of financial institutions grapple with the issue of security and centralization, which makes transactions consume more time and cost to get processed, and also increases the risk of financial fraud, in contrast to crypto-powered financial systems. The ability of crypto to address a lot of the challenges associated with traditional financial systems does not pose a threat to these systems, rather, it provides an opportunity for an embrace of the two systems, to bridge the gaps in the financial industry.
With the merging of crypto and fintech, it would be possible to improve the security of global payments, and also make financial institutions independent from the government or other central authorities so that the rigid centralization that stiffens the system can be collapsed. This would also translate to a reduction of some organizational expenses, an eradication of the banking commissions associated with processing transactions in non-crypto-powered financial institutions, and the provision of a better experience for users.
The infusion of crypto in fintech services will also accelerate financial inclusion, the use of mobile banking services, and also broaden the reach of fintech companies. This is possible because crypto-based fintech products provide a universal currency for financial transactions, and a more flexible and an easier way to be included on the global financial map since there would be no need for the cumbersome paperwork required to access financial services from banks and other non-crypto financial institutions. These, and many more, position the future of finance to feature an inevitable marriage of fintech and crypto.
Earlier this year, Visa released a statement in which it recognizes digital currencies as an exciting avenue for them “to expand their network-of-networks to support new forms of commerce” and also reshape how money moves across the globe. This is a clear indication of the company’s affirmative stance on the power of cryptocurrencies, and blockchain, to transform financial technology.
Standard Chartered Bank has also revealed its intention to take financial technology services to the next level through the integration of crypto with “regular” fintech. It revealed that a crypto custody offering for the institutional market is being developed by its venture and innovation arm, which would become “one of the most secure crypto custody solutions on the market.” The company operates in about 70 countries. This hints on how broad their project will spread, globally. With large financial firms thinking along this line, it is inevitable to have widespread financial products that leverage the intersection of fintech and crypto.
Swiss financial services company, Seba Crypto AG, has raised $104 million as it plans to build the first crypto bank in the world. A lot of fintech companies have also developed other crypto offerings, like debit cards, as the buzz around crypto continues to increase. Monolith visa card, cryptobase card, coinbase card are some of the available crypto debit cards in the market today.
Considering the trend of activities in the global financial industry, it is evident that blockchain and cryptocurrencies will play an integral role in reshaping global financial systems. From PwC’s 2019 global fintech survey, 40 and 41 percent of 500 top executives surveyed from companies in Technology, Media and Telecommunications(TMT) and Financial Services(FS), respectively, believe that blockchain is the technology that will drive change in the fintech industry, according to the 2019 PwC global fintech report. As the world embarks on a journey to reimagine and redefine the future of finance, current financial trends indicate that a fusion of fintech and crypto will be crucially pivotal.