Money is changing. And not in the way it has over centuries; slowly, with the rise and fall of currencies, empires, and financial systems. Today, money is undergoing a rapid transformation. Currency that was once controlled by institutions, physical vaults, and face-to-face transactions is now digital money ruled by code, algorithms, and decentralized systems.
We’re moving from physical to automated. The future of money is digital, fast, intelligent, and borderless.
Key Takeaways
- Money is transforming rapidly from traditional banking to digital money controlled by algorithms and decentralized systems.
- FinTech addresses the shortcomings of traditional finance by providing efficient, transparent, and innovative solutions.
- Algorithmic finance uses AI, smart contracts, and blockchain to streamline financial processes and enhance security.
- The shift to digital money enables faster transactions, broader access, and improved trust compared to physical banks.
- Despite its benefits, the growth of FinTech requires a robust infrastructure, thoughtful regulations, and high security.
Why Is Traditional Finance No Longer Enough?
For decades, traditional banking systems were the only option we had to fulfill our financial needs. For a long time, it seemed like enough. The digital money revolution is a fast one, though, so soon enough, a crash had to come. Our needs evolved and expanded. They now go way beyond the services that physical banks with their cheques, outdated procedures, unnecessary bureaucracy, and personal appointments could keep up with.
How many time zones did you cross last year? How many currencies did you buy your coffee with? Additionally, how many international transfers did you need to do?
There was an undeniable void, desperate to be filled and growing bigger each passing day. That’s where FinTech, short for Financial Technology, came in for the rescue.
At first, it emerged slowly and timidly, not sure of the reaction it would awaken. Will people embrace this new, revolutionary way or push it to the margins of the financial world as dangerous and untrustworthy? New platforms and startups started to rise. They rebuilt the entire system from the ground up using automation, data, and coding to solve problems regular banks have struggled with for years. Exclusion, lack of transparency, inefficiency, and lengthy procedures? You name it.
When building a FinTech business, evoking trust and a sense of security is one of the most challenging things for the new players. And sure enough, it took some time for us to get used to the idea that now everything we’ll ever need from the banking system is literally at our fingertips. But when we finally understood, when we finally put our trust in this new banking alternative, we jumped at it. Now? There’s no turning back.
But FinTech is only just warming up. We are now entering a completely new phase of the revolution where it’s the algorithms, not institutions, that will define how the money flows, grows, and remains secure.
“Algorithmic Finance” – What Does It Actually Mean?
The term was coined to describe all the financial processes driven by software rather than humans, and it’s built on advanced technologies such as:
- Artificial Intelligence – AI makes investment decisions, credit scoring, and fraud detection much easier and smoother than before, not to mention a smaller error margin. It’s also an invaluable help with customer service.
- Smart Contracts – Automatically executing financial agreements based on preprogrammed conditions, making loans and insurance payouts that much easier to handle
- Blockchain – Enables secure, decentralized, and tamper-proof transactions with no intermediaries
Together, these technologies will shape the future of our finances. They will impact everything from how we save our money to how we borrow and invest it,
It’s a Digital World Out There
Consider the way you interact with money today. You barely even see it anymore!
You’re probably paying for everything with Google Wallet and Apple Pay. You make all your transactions through mobile banking and receive your salary in digital form. We don’t often stop and think about what the infrastructure is behind all these services. However, let me tell you that it’s gradually abstracted away from the physical banks.
Countries like Sweden or China are already trying out digital versions of their national currencies. Cryptocurrencies are becoming more and more stable by the day. They have already become an alternative payment method that enables real-time cross-border payments. Meanwhile, the assets become digital tokens representing stocks, bonds, and real estate.
The Future of Finances Is Programmable. Why Is It Better?
Apart from the obvious perks like not having to personally go to the bank to do every little thing, being able to do international transfers freely, receive your salary right away, and exchange currencies without a hassle, FinTech has completely changed the way companies can conduct business and expand more dynamically than ever. Platforms like OmniMatrix, sporting products like MatrixPay payment gateway or OmniCore, their cryptocurrency exchange platform, deliver some never-thought-of solutions to the financial industry.
What’s more, this digital era is all about inclusion. Even nowadays, billions of people don’t have access to traditional banking, but now all you need is a smartphone, and you’re ready to go. Efficiency in comparison to the traditional banks is astounding. Also, trust, something that some people thought would be impossible to achieve in this new financial model, is actually growing in comparison to that of the physical banks, due to the complete transparency of the new platforms.
Obviously, everything comes with its challenges, including digital money. To keep moving in this direction, FinTech can’t be simply efficient. What is needed is a robust infrastructure, thoughtful regulations, ethical design, and utmost security.
