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The history of the first fintech project begins back in 1950, from the moment the first credit payment card appeared. Further, the invention of bank cards, ATMs, and self-service devices in retail began to move the financial industry forward, introducing new technological solutions.
The turning point in financial technology can be called the global crisis of 2008, after which people lost confidence in the classical financial system. To solve these problems, startups and innovative solutions began to appear in which investors invested large sums of money. So the sphere of fintech projects has sparkled with new colors and has become one of the most popular and promising areas in the modern world.
The fintech services “penetration index”, which indicates the percentage of the population or businesses that are involved in financial technology, is increasing every year. Looking at the main directions of fintech development, the following can be noted:
Financial transactions: Online cash payment and transfer services, B2B payment services, remote cash desks and terminals.
Financing: Loans for individuals, lending to businesses and start-ups, crowdfunding.
Financial management: Services for money management, financial analytics tools, trading algorithms.
Exchangers: Online services of currency exchange, cryptocurrency exchange, fiat to crypto exchange.
In general, the development of the industry over the past ten years has moved precisely in these areas, since business and society most of all needed to optimize these processes. But over the past six months, we have faced a new reality—life in isolation—and this could not but affect the development of financial technologies.
Prospects for the development of Fintech in 2020
To fully understand the situation, it is necessary to tell what is happening in business now, and how the COVID-19 pandemic, which we all now have to keep in mind, affects these processes. Of course, almost all cloud and remote services are now becoming more in demand and popular. According to statistics, the growth in the number of users of many online sites has grown by at least 15 per cent. For a market that already has a multi-billion audience, these are impressive numbers. And all these services are closely tied to fintech, as all financial interaction with customers takes place in a remote semi-automatic mode.
But, in addition to increasing the share of online services, the pandemic has led to more serious consequences. The economic crisis caused by the shutdown of enterprises, which led to a drop in the value of all major assets in the traditional market, forced people to reconsider their attitude to cryptocurrencies. Comparing the losses of investors who held fiat currencies, stocks of companies, or other valuable assets in our portfolio with cryptocurrency investors, we will come to very interesting conclusions. Since the beginning of the year, BTC has grown from $6,800 to $9,800 per coin at the time of writing. It is unlikely that even one classic asset, especially in a pandemic, can boast of such results. And in general, many people pay attention to cryptocurrencies, evaluating their advantages as not only speculative but as a convenient financial instrument.
Separately, it is worth touching on the legal status of cryptocurrencies in modern states. Governments understand the independence and non-control of decentralized assets. Therefore, they are active in order to adapt and maintain the relevance of their financial systems. Some countries, such as the US and Russia, adhere to a policy of restrictions on various cryptocurrency activities. While the US SEC waged a real war against TON and Libra, in their opinion, threatening the financial system of the state, Russia seriously considered the ban on the full use of cryptocurrencies in its jurisdiction.
Nevertheless, even in the US, there are licenses for the activities of cryptocurrency organizations, although this is strictly regulated. In Europe, they are more loyal to this issue, as evidenced by the preparation of the AML directive No. 5, which sheds light on the status of cryptocurrencies. In general, according to forecasts, over the next 1.5-2 years, most countries will have a clearly defined policy in relation to crypto.
This becomes an additional incentive for the development of cryptocurrency projects and large investments in the crypto market in recent years. That is why it is precisely the cryptocurrency market and the blockchain companies that are becoming the most ambitious and promising direction in the development of financial technologies in the near future.
The construction of bridges between fiat and cryptocurrencies
Most likely, we will not see the “victory of cryptocurrencies over fiat” so often mentioned by crypto enthusiasts, as well as the complete disappearance of digital money, which skeptics scare us with. This means that the most likely outcome will be the simultaneous coexistence of two types of valuable assets and their active interaction. The most understandable and necessary direction for the development of this ideology is the services of converting fiat money into cryptocurrencies (and vice-versa). Now exchangers occupy a significant share of this market, despite the fact that their demand has not even reached half of the expected values in the coming years. There are companies such as Indacoin which are giving advanced technological solution.
The fintech project from London, Indacoin, was one of the first on the market to offer the possibility of buying cryptocurrency using bank cards. For seven years, the company has evolved from a crypto exchanger into a fully-fledged gateway for quickly converting Visa and Mastercard payments into cryptocurrency. More than 100 major companies around the world use Indacoin services, such as Bithumb, OKEX, Changelly, etc.
The security system provided by artificial intelligence algorithms prevented more than a million attempts to withdraw funds through stolen wallets and bank cards. The key difference between Indacoin and classical payment systems is the 100 per cent coverage of chargebacks that may arise during the work of crypto projects.
The service works with credit cards of banks, which increases the requirements for platform security tenfold. To meet the requirements of banks, and to protect against fraud both Indacoin and its customers, the company integrated identity verification through KYC. This is done to comply with current and future AML directives. Checking the client for databases and searching for his connections with the criminal world is a mandatory stage of this service. A UK financial project is required to comply with all legal requirements. And if this project is also cryptocurrency—then take the necessary measures against attempts to launder money.
Indacoin has become much more than just an exchanger. This is a complete service that operates in accordance with the most advanced financial legislation in the world. At the same time, Indacoin is a turnkey solution for many cryptocurrency projects. As you already understood, the implementation of all the requirements of banks and legal norms requires a lot of time, huge competence, and understanding of complex processes. But, thanks to the already working Indacoin platform, which is used by leading market players, many startups can avoid these difficulties by integrating the service API into their functionality.
The above information on current problems and prospects of financial technologies allowed allows us to get a clear understanding of the processes occurring in this industry. The interaction of the two pioneers of modern high-tech—blockchain and financial technology—is becoming inevitable and is growing every year. We see the future of the financial industry precisely at the point of contact between these two areas, which is also indicated by trends. We are confident that Indacoin, as well as other projects in this field, will be very popular in the near future, and will continue to develop most actively in order to solve a growing range of pressing problems.