If you’re looking for an investment with a lot of upside potential, look no further than the world of fintech. Simply put, fintech startups are aiming to revolutionise how businesses and individuals handle and use their cash. These startups seek to replace traditional business processes by adopting technology instead. In fact, many of these companies have received funding from prominent venture capitalists. As a result, they’ve been able to build teams that include some of the best minds in business. They also have access to a variety of resources and funding, which they utilize to fuel their innovative spirit.
Many businesses have seen a lack of growth in their traditional market. They find themselves competing against larger rivals who have a bigger base of global customers. A few sectors are experiencing this problem even more dramatically. For instance, retail sales are declining in some parts of the world. Fintech startups aiming to target this market should therefore look to improve their methods of conducting international money transfers.
Another example of fintech potential is the concept of financial technology. This encompasses software applications that help people manage their money and avoid risks associated with it. The best examples of such software applications are business-to-business lending services and online banking. Fintech startups aiming to cash in on the financial technology trend should therefore look to create apps that complement existing service offerings. This could involve developing financial solutions for businesses that don’t have bank accounts. This could also mean assisting people who send money abroad.
Some fintech startups are working on products that would directly compete with traditional banks. Two examples worth mentioning include PayPal and Xoom. Both businesses transfer money internationally using digital currencies like PayPal. However, PayPal has a much bigger reach, while Xoom concentrates on mobile payments. Both companies are valued at more than a billion dollars by their investors.
An additional example would be Mastercard’s prepaid visa card. This offers customers the opportunity to use credit and debit card to make purchases overseas. App developers aiming to tap into the prepaid niche should therefore look to create an application that allows users to make purchases without having to bank with a local bank. Such an app could enable merchants to accept payment through the phone and process transactions without requiring physical access to a card machine. This would give fintech startups an opportunity to expand into markets where local banks don’t offer credit or debit card services.
One more example would be the banking relationship app, which works on top of current accounts. Current accounts can be enhanced through the use of an app. For example, Mastercard’s Mango debit card offers merchants an opportunity to withdraw money from their customers using their card instead of using a bank ATM. In this manner, the merchant does not need to contact their bank for money pickup. They simply use their debit card and the Mango app would do the rest. Current account businesses stand to benefit from this arrangement, since they get a higher interest rate and retain more cash for business investments.
The growth of fintech starts in the Asia Pacific region. The region’s top economies – China, India, Malaysia, Singapore – have the most potential for startups, according to a recent report from Citibank. The report noted that the Asia Pacific was one of the fastest growing regions for startups in terms of dollar revenue. Asia’s economy is currently growing at a pace of over 7% per year, making it the world’s fastest-growing economy. In addition, the region’s population is aging, creating the need for more high-tech businesses.
Therefore, companies looking to tap into the potential of Asia should look to crowdfunding platforms for their initial seed rounds. Crowdfunding is a form of equity financing, which typically has a funded amount, which is divided between investors and entrepreneurs during a successful campaign. The tokens could then be used as collateral to obtain credit lines from banks or other lending institutions. This provides companies with the opportunity to raise capital without having to put up personal financial assets.