The march towards a financial democracy
Over the past decade, many areas of our lives have been impacted by the rise of technology. It’s changed how we shop, date, eat and bank, offering services and making products that are simpler, cheaper and more convenient than ever.
This revolution has also liberated us. Startups have loosened the grip of multinational corporations, whose virtual monopolies had resulted in poor outcomes for consumers.
Technology has given power back to the consumer, nowhere more so than in financial services. This philosophy is central to what we’re building at WiseAlpha.
The financial crisis changed everything
Alternatives to traditional financial services emerged as the financial crisis was wreaking havoc on the world’s banking system. That’s no coincidence.
A decade ago, consumer trust in the banking sector fell to an all-time low. People no longer trusted the institutions that looked after their money. Having been bailed out by central banks and taxpayers’ money, the banking sector promised to reform its ways but, ten years on, not a lot has changed. And consumers aren’t stupid. Many have voted with their feet, choosing to leave traditional financial services providers, preferring low cost, technology-led alternatives with reputations untarnished by past misdemeanours.
The crisis also was a great test bed for innovative forms of finance that sprung up to offer consumers and businesses alternatives to traditional forms of saving, lending, and capital raising. Entire industries gained popularity and traction at a time when people were tired of using providers that were expensive, impersonal and short of trust.
Peer-to-peer lending is one example. Forged in the fires of the financial crisis, the industry was boosted by the stagnant funding conditions that followed when banks all-but-refused to lend to individuals and SMEs. Other funding sources emerged, as innovation through technology offered new options to those seeking cash. The likes of Zopa and Funding Circle flourished.
A demand for control
Over the last decade, individuals and businesses have shown a desire to be more in control. They no longer want to hand responsibility for their affairs over to an anonymous provider who is going to charge them high fees for low-quality service.
Modern financial services — from Monzo to TransferWise to Crowdcube — are the poster boys of fintech, offering customers personal service, security, low costs and a feeling that their interests were being looked after.
Technology made this revolution possible. The advent of mobile technology, as well as more faith being given to online marketplaces and trust being awarded for securing applications, means that consumers can now control their finances from their pockets.
Individuals have been given access, they’ve been empowered, and Tech has made finance democratic again.
Read the full article on the WiseAlpha Website.
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