What are our Future FinTech Champions learning at the moment? And what are their thoughts on the current development of FinTech? Read through this submission from one of our FFCs, Saajid Mustun, currently studying the PwC Flying Start Degree Programme @ Curtin University [Submission made in June 2022].

Fintech, in its simplest term, means finance blended with technology. Similarly, regulatory mixed with technology is known as RegTech, supervisory with technology is abbreviated as SupTech, medical and technology as MedTech, and so on and so forth(you get the idea).

So, in its essence, FinTech combines the best of two worlds: finance, an ever-present industry, and technology, which is constantly evolving. The intersection of those two industries logically creates disruptions around the world. As such, technology is being channelled at an unprecedented rate through financial institutions; new cryptocurrencies are being used; more metaverses are being created; mobile payment systems and crowdfunding platforms are becoming increasingly popular; and artificial intelligence (AI) is gaining relevance on a global scale.

However, do not worry, dear readers; the aim of this blog is to demystify those technical terms and help you understand their importance in our modern world. While those terms may sound “like Greek” to most of us, they are actually simple and beautiful concepts. They each have their own origin, evolution, and, most importantly, relevance; in the end, they are all pieces of the puzzle that depict the future of our financial world and, thus, influence our way of life.

Cryptocurrencies

Let us break this complex term into two: “crypto” and “currencies”. We all know what currencies are; they are a medium of exchange for goods and services. Now, let us substitute the word “crypto” for “digital”. We are then left with digital currency, a much simpler term. When a currency exists in a purely digital format, we term it a cryptocurrency. Similarly, many other elements of our daily life have been purely digitalized; pictures, messages, documents, and so on. Cryptocurrency is simply another by-product of digitization and, logically, also comes with its own set of advantages and drawbacks .

There are many cryptocurrencies, such as Bitcoin (BTC), Ethereum, Solana, and so on. Bitcoin is the star cryptocurrency, similar to the US dollar, which is the star currency. The main advantage of cryptocurrencies is that they work faster(Levy 2022) simply because transactions can be done at the touch of a button. This reminds me of traditional photography versus digital photography. With traditional photography, we have to expose the film to light, develop the image, and print the photograph. It is a much lengthier process . With digital photography, we can obtain a photo within seconds. The same logic can be extended to the case of cryptocurrencies versus traditional banking. The banking system includes a lengthy process for making transactions, especially cross-border ones, while crypto payments are instantaneously made. This explains why cryptocurrencies such as BTC have been gaining popularity over recent years and why major companies such as Tesla are investing in them. Hence, cryptocurrency overcomes the biggest loophole of traditional banking—bureaucracy—and hence, represents the most efficient way of doing business transactions. Cryptocurrency is the future. 

Interestingly, the founder of Bitcoin decided to remain anonymous after he realised the immense potential of his creation. His virtual and seemingly “innocent” token did not only emerge as a tool to pioneer new and more efficient technology, but also as a weapon to destroy. A weapon capable of destroying jobs, institutions, but most importantly, people’s wealth. It put the founder’s life in danger as he/she was rivalling the dominance of traditional banks and governments. In reality, cryptocurrencies can even influence geopolitics. For example, we are all aware that China has the potential to overtake the USA as the most economically powerful country in the world. However, the US dollar is America’s greatest strength as the world depends on it. In many cases, America sadly weaponized the US dollar(Letzing 2022) to maintain its supremacy. In such a context, China can make use of cryptocurrencies to reduce its dependence on US dollars and shift power to its financial institutions. In fact, fintech experts predict that China’s digital yuan could challenge the dollar in international trade this decade(Huang 2022).

Metaverses

This is another fascinating yet simple concept. We all know what the universe is. However, what is a virtual universe? You probably guessed it right. It is a metaverse. Quite interestingly, most of you have probably already been in one. Fortnite, Minecraft, and GTA Online are examples of the metaverse in the gaming industry. However, let us observe how this marvellous concept can be applied to the real world.

Metaverses are revolutionising the business landscape through tech optics. Firstly, we can go shopping in the metaverse. I still remember the first time I accompanied my mum for shopping. I remember it because it was my first and last time. My mum, being a very choosy lady, took the time of her life to choose only one dress! In fact, I always wished that “something” could exist that would allow people like my mum to quickly and easily try their clothing, sometimes without the salesperson constantly pestering us to purchase the product! Today, that something materialised into the metaverse. You can simply create your own avatar to visit shops and try new clothes on you in a matter of seconds(World Logan 2022). In fact, you can also create your own digital home and visualise how TV sets, sofas, beds, etc. would fit in before they get physically shipped to your address.

Metaverses allow you to make money. Since this is a virtual world, digital currencies will be used. One can own assets such as land and property in the metaverse and use them to either rent them or make capital gains. The corporate metaverse environment means that you can actually have a “real” job virtually(World Logan 2022). While this concept may seem appealing to only a handful of people, for me, it is more about connecting the world. One way metaverses could be leveraged on and prove to be constructive is to allow lower-middle income class to access job opportunities and providing social mobility.Regional unemployment could be reduced, and a greater pool of creative people could be readily tapped into. Above all, it would help the world to achieve the UN SDG1, that is, to try eliminate world poverty.

Mobile payment systems

Karthikeyan (2012) explains mobile payment systems that allow the payer to transfer funds to the payee. Mobile phones have reshaped the way business is conducted. People can now transact from anywhere and anytime(Daragmeha 2022 ). it is estimated that mobile payments have also contributed in protecting lives, allowing for contactless transactions and thus help in reducing the contamination rates in this sanitary crisis. This is one of the reasons why companies have been introducing their own apps during recent years; JuicebyMCB, SBM app, Pop by Bank1, Blink by Emtel, Mytmoney, and the list goes on. According to forecasts, mobile money transactions are expected to reach $9 trillion per year by 2024(Sofftek 2022).

Crowdfunding platforms

Crowdfunding is a method of funding your projects from funds obtained from a crowd on online platforms. GoFundMe and Kickstarter are popular platforms used for that purpose. However, I am sure that most of you must have heard of #TeamSeas and #TeamTrees. Interestingly, both are actually crowdfunding campaigns launched by star YouTuber Mr. Beast. #TeamSeas aims to raise $30 million in order to remove 30 million pounds of plastic and trash from the ocean, while #Teamtrees aims to plant 20 million trees by 2020. As you can see, crowdfunding has the potential to save the planet from our greatest threat: climate change.

Artificial Intelligence(AI)

Intelligence is a very broad concept. A subsection of intelligence relates to the ability to acquire and apply knowledge. For example, cooking is a form of intelligence; a person learns the recipe and then applies the techniques to cook it. For example, we, Mauritians, are in love with tea. So, let us look at the steps involved in preparing tea; fill up a kettle with water, boil the kettle, place a teabag and boiling water in a mug, let the infusion happen, remove the tea bag, and add milk and sugar (Whittock Consulting 2022). When a person executes those 7 steps, it is known as human intelligence. If we copy those 7 steps and command a machine(robot) to execute them, it is then termed “Artificial Intelligence” (AI). This principle can be extended to a myriad of other cases, from Tesla’s autopilot to robot waiters in Japan.

AI is important because it boosts efficiency and reduces costs depending on scale and field. If mundane tasks could be easily replaced by machines, the production process would become quicker and the quality of the product would also improve. For example, the use of healthcare bots enables hospitals to provide 24/7 assistance(Pedamkar 2022). Hence, AI helps in saving lives. The application of artificial intelligence in the banking and finance sector is best shown through use cases like anti-money laundering, where questionable financial transactions are tracked and reported to authorities(Pedamkar 2022). Hence, AI allows for improved security. AI can be used for entertainment; in the gaming sector, you do not need a partner to play with you because there are bots to help you refine your skills(Pedamkar 2022). These, as well, are powered by AI.

Conclusion

As digitalization continues to play a vital role in reshaping the financial industry, it becomes necessary that people like us embrace this change instead of resisting it. That is why financial literacy is fundamental when the world is going through this massive transition. Financial literacy builds trust, and trust promotes togetherness. Fintech entrepreneurs, tech giants, influencers, banks, and investors should not be the only players in this arena. I hope you enjoyed reading my piece and walking away with new found knowledge that could support you in taking a leap in FinTech if you still had reservations  and doubts!