The Evolution of Mobile Finance: How Crypto Apps Are Shaping the Future of Banking

By Gregory Pudovsky, a digital nomad hailing from Poland. Gregory is not only a financial analyst but also a valuable contributor to various online magazines. With a wealth of experience in the financial industry, his insights and expertise have earned him recognition in numerous publications. Utilising his spare time effectively, Gregory is currently dedicated to writing a book about cryptocurrency and blockchain.

The once-clear demarcation between traditional finance and Financial Technology (FinTech) is becoming increasingly nebulous, thanks largely to revolutionary strides in technologies like blockchain and cryptocurrencies. With an increasingly digital lifestyle, the hunger for online payment solutions has reached unprecedented levels, fueling a surge in the acceptance and usage of crypto solutions.

A recent analysis from Technavio, a well-respected market research firm, foresees the global cryptocurrency market ascending to an eye-popping $1.8 billion valuation by the year 2027. This prediction reveals more than a temporary fad; it marks a radical transformation in how individuals and institutions engage with financial ecosystems.

FinTech Companies Are Shaping Financial Services of the Future

FinTech firms are making waves by offering crypto-based financial services that eclipse conventional banking systems in terms of speed, cost, and security. Take digital wallets for example: these tools serve as de facto bank accounts for a new generation that values instant, borderless transactions. Juniper Research anticipates that by 2026, digital wallet users will surpass 5 billion worldwide, driven in part by the rise of “super apps.”

Super apps, which consolidate various services like payments, messaging, and shopping, have proven highly successful in Asia with platforms like Alipay and WeChat. These platforms had a market value of $61 billion in 2022 and are projected to expand to $426 billion by 2030. Their growing popularity hints at a future where financial transactions are deeply integrated into our daily digital experiences.

Embracing Embedded Finance and Blockchain

Embedded finance is another catalyst for the rapid shift from traditional banking to more agile, FinTech-led solutions. Reputable tech companies are jumping on the bandwagon, with the embedded finance market estimated to grow to $248.4 billion by 2032. This has caused traditional banks to be more and more marginalizing. Blockchain, the backbone of many FinTech innovations, is set to grow from $1.4 billion in 2022 to a staggering $43.1 billion by 2030. At companies like Mercuryo, Banking-as-a-Service solutions are already taking shape, enabling a seamless experience for users to toggle between crypto and fiat currencies. This kind of integrated, blockchain-based solution offers users significant advantages in terms of reduced transaction times and costs.

The Government’s Role: CBDCs and Regulation

Governments around the world have taken notice, with many exploring Central Bank Digital Currencies (CBDCs) as a means of modernizing their financial infrastructures. They recognize that failing to adapt could render traditional banking systems obsolete within a decade. Yet, the hurdle that traditional banks still present is their robust, established regulatory frameworks. Crypto is a nascent, fast-evolving sector, and regulatory bodies are playing catch-up. Some crypto advocates argue that increased regulation undermines the decentralization ethos of blockchain, but the fact remains that some level of oversight is inevitable as crypto and traditional finance (TradFi) continue to intertwine.

The Role of Artificial Intelligence

Artificial Intelligence (AI) stands as an undeniable cornerstone in the advancement and transformation of the FinTech industry. As of now, an overwhelming 90% of companies in the FinTech sector are actively leveraging AI technologies in their operations. Far from being a mere passing fad, artificial intelligence serves as a pivotal engine fueling the expansion of the industry. Forecasts predict that by 2028, AI will command a staggering market value of $49.43 billion, underscoring its growing relevance. In this context, AI wears many hats: it not only delves deep into consumer behavior analytics, but also crafts personalized products and services to cater to individual needs and tastes.

Gen Z Leads the Charge

As we navigate through the midpoint of the year 2023, the impact of Generation Z on the FinTech landscape is becoming increasingly palpable and transformative. Particularly in European countries, the influence of this digitally-native generation is remarkably evident. For instance, in Norway, a staggering 95% of the population is actively using mobile payment applications for their financial transactions, while cash payments have been dwindled down to a mere 5%. These statistics aren’t isolated to just Norway; the United Kingdom is on a fast track to mirror these figures, with projections indicating that the country will achieve comparable usage rates of digital payment technologies by the year 2026.

Conclusion

As we stand at the intersection where the collaborative efforts between FinTech startups and traditional financial institutions are fast progressing, the reality is becoming more important than ever. A unified approach can accelerate the development of a robust, secure, and inclusive global financial system. Failing to adapt is not an option, as the tides of change are too powerful to resist. The merging of AI and Blockchain, along with the vast reach and experience of traditional finance, can lead to a whole new era of empowerment and inclusivity. It won’t only have the ability to radically change the financial landscape, but also to democratize access to financial tools and services for people around the globe.