By Naushad Contractor

Crypto and digital currencies have been making the news more and more. For crypto – it is normally in relation to the currency trades. For digital, it is generally in reference to payments. The essence of them, which was once as unfamiliar as The Cloud when it was introduced, is becoming more concrete as more people around the world engage in buying or using them. It is important to understand this new monetary playing field. In this recently published article from John Eric Home, guest contributor Naushad Contractor (founder of Fable Fintech) discusses the Fintech revolution.

Once upon a time, there lived a king called “Big Cash.” In his kingdom reigned physical princes – banknotes, gold, and silver. The Big Cash dynasty continued uninterrupted for centuries. Until recently when a new young prince emerged – digital. Unlike his ancestors, this ambitious prince expanded his dynasty quickly and brought to life a new baby – crypto.

In dynasties throughout history, destabilization occurs. People who live in the kingdom desire something new, something better, a new way of doing things. In our era, things such as “Demon”itization, the Coronavirus, and the mobile phone have all impacted the way people use money. And they have all contributed to making digital currency popular and powerful, upsetting the traditional big cash reign, and making digital currency more widely understood and used.

Mobile wallets are replacing cash. People can now choose from multiple payments methods at their convenience. The use of digital currency is fast and simple. Ask yourself, “when was the last time I went to a bank branch?” or “When was the last time I issued a check?”. Aside from traditional banking, the digital currency and FinTech space has also had a domino effect on other industries like travel and shopping. Electronification of these industries was possible only because we could pay for these digitally.

Bringing banks into the future

Of course, banks and financial institutions are the backbone of payments. Payment involves removing money from one bank and into another. Therefore, it is critical – especially in the digital space – that they get it right. The digital revolution is forcing financial institutions to evolve their payment solutions.

The payments industry is one of the most complex industries in the financial world. Multiple players in this industry work in tandem to make payment transactions work. Digitization has not only made the payments process more transparent but also improved transaction speed and overall user experience. Banks are required to update their back-end infrastructure to allow integration with multiple payment service providers. For FinTechs, with their agile model built over the cloud-based technology, it is easy to provide a wide range of services with little capital cost.

The market for cross-border payments is expanding. International B2B payments will be a huge opportunity in the upcoming years. FinTech will simplify the procedures involved in cross-border payments, which will help numerous markets.

According to a Juniper Research analysis, the value of B2B cross-border payments would rise from $34 trillion in 2021 to more than $42.7 trillion in 2026. eCommerce marketplaces, which are typically cross-border native platforms, were also shown to be a key driver of this precipitous expansion, according to the study. The 2020 McKinsey Global Payments Report states that global revenue increased by over 5% in 2019, increasing the total for global payments to close to $2 trillion. These $2 trillion are made up of contributions from countless enterprises worldwide. Companies involved in FinTech are becoming more and more important.

For a bank navigating the complex, ever-evolving ecosystem of digital and cross-border payments, the support of a trustworthy ally is in the shape of a domain expert – one who understands the unique regulatory landscape that banks operate in as well as the cross-border payments ecosystem itself. This reliable specialist collaborator becomes the backbone on which a cross-border payments business grows. Banking on the expertise of the specialists, banks and financial institutions providing digital and cross-border payments enter agreements with partners, integrate with regulatory technology and licensed partners, and proceed with confidence through regulatory reform.

A final word

Technological advances in the form of mobile devices, Artificial Intelligence, social media, and blockchain have ushered in an era of open banking in the new millennium. Large monolithic firms, because of their large IT footprint, are collaborating with FinTechs for a faster go-to-market.

Trying to predict the future of the digital is like trying to predict the “second bounce”. Once we know a few parameters, (such as speed of throwing, wind direction, weight of the ball) it is reasonable to try and predict where a ball may land once you throw it. However, it will take a serious amount of luck and ability beyond intelligence (artificial or otherwise) to be able to predict the place where it will bounce next, or whether it will bounce again at all.

The few things that are very clear are:

• 1. The adoption of FinTech in our daily lives will grow and, in many cases, we may not even realize it.
• 2. The speed of this adoption will be much more rapid than it ever has been. The steeper learning curve will be a result of both the client needing it and, in many cases, the obsolescence of erstwhile options.
• 3. ATMs, for example (yes, they are also part of the FinTech revolution) took very long for people to adopt and not go to bank branches for withdrawal of money. Mobile Banking on the other hand has taken off as if people were born with it being the norm.
• 4. Consolidation in inevitable. FinTechs will merge with one another. Some banks will acquire some FinTechs and become FinTech savvy. Some FinTechs will become or acquire banks.
• 5. Baby Crypto will grow up and come of age. Its attributes such as height & weight, nature and color of hair (read as popularity and use cases) will however be defined and refined over time by consumers, service providers and regulators. Crypto will be a boon for some use cases and perhaps even for some countries and currencies.

We are now on the digital currency rollercoaster. Fasten your seatbelts and enjoy the ride.

To read the original article as published in the winter edition of John Eric Home – or any of our other great tech articles feature in the issue – please visit: