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Dec 17

How to find the good fintech investments

Reading Time: 3 mins

Fintech really started in 1866, with the first transatlantic cable. By 1966, Telex had arrived and following this came the major emergence of ATM’s, online banking and the internet. Since then we have seen vast numbers of tech start-ups and the emergence of cryptocurrencies.

Fintech investments have continued to make the news, and in the opening period of the year had fallen sharply. This was as a result of the lack of activity from China, who had previously been key to the overall rise in Fintech. In comparison, the US and European countries such as the UK, have continued to be heavily involved in Fintech investment.

$22 billion was invested in fintech deals in the opening six months of 2019, which was a stark contrast to the $31.2 billion from the same period of 2018. This meant an overall decline of 29%.

Despite this decline, Fintech investments still remain strong and have continued to impact many sectors, perhaps none more so than in Forex trading. The way that traders and investors currently go about their work is almost unrecognisable from the 1980-1990s. Prior to it branching into the field, there were only a small amount of forex brokers and investors who could make use of the foreign exchange trading platform, as a result of accessibility issues – only large corporations and well-established financial entities were prevalent in the area. It has made the forex industry far more mainstream, with the evolution of mobile apps and analytical tools being core drivers in the increase and improvements in High Frequency Trading – something which many predict may remove human involvement in trading, as we know it today.

Cryptocurrencies are now the next and current step for Fintech and forex in general. When Bitcoin first hit the market in the early period of 2009, it saw a major rise and became one of the largest growing forms of investment for many traders across the globe. Since the introduction of this digital currency, many more have followed, but they have all seen major market fluctuations and volatility over the last ten years. As such, this form of investment is avoided by many.

Blockchain technology is now an area that encompasses heavy investment, as this has a much lower level of risk and theft, which has long been associated with cryptocurrency. So, with this in mind, how do you understand and establish what is a good fintech investment?

Fintech is all about improving services, so there are still many opportunities available. This is why there has been so many different start-ups in recent times, something which will only continue to move forward.

One of the key areas for investment has been in banking, business and IT departments. For business it encompasses the likes of preventing fraud and overall risk management. Furthermore, other core such as marketing, account opening and payment processing are major beneficiaries of the technology, with the latter proving to be an area of increased investment in Fintech, including the growth of business transaction options and person-to person payments. Examples of these includes the likes of Circle, Stripe, Aeropay, Ripple, Bitpay and PayPal.

Bitpay was created as a tool for cryptocurrency investments and is now being used by thousands of businesses. It was founded in 2011, around the early period of growth in bitcoin. This technology has seen companies now able to accept payments by websites, in person and even by email. Consumers are also now able to manage and use their bitcoin portfolio with consummate ease in comparison to the early days. This Fintech has also made a major industry impact in a number of places such as Ohio, in which businesses can now pay their taxes using cryptocurrency.

From the previous examples, PayPal will be known to virtually everyone. It first became available in 2002 and has grown to a revenue of around $15 billion. It is now being used as a platform for both personal and business transactions. On top of this, the service also offers transfers, payments and credit services.

PayPal is now accepted by millions of services and available across 200 different markets around the world. It is used as a safe means of transferring funds by both individuals and businesses. The impact PayPal has made has been remarkable and it is now used for government payments, on top of online donations and political fundraising.

Other start-ups have also been created through previous ones. An example of this is Braintree, which is a service of PayPal, and is used as a means of a payment platform. It is used to both accept and process mobile payments from certain websites and applications on smart phones. This has been extremely popular, and is now being used by the likes of Casper and Uber, thus reducing any transactional issues that they may have previously encountered.

These all show that there is endless growth opportunity when it comes to investment in the future of Fintech as a solution. Technological advances in the area are at a relatively earlier stage, with many predicting that the current state of play is only the tip of the iceberg. There is more to come – a lot more.



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