It’s hard to see the forest with all those trees in the way. We’re currently going through a revolution that’s larger, arguably, than the industrial revolution. The internet and the rise of technology have transformed the way we live — how we talk, how we work, how we go about our daily business, and, yes, how we manage our finances on a global and individual level. It’s possible that in fifty years, once humans have some perspective on the shift that’s happening, we’ll see these days as the beginning of a great change. But how exactly is technology changing the world of finance? We take a look below.
Historically, banks and other financial institutions have been in charge of the money, and whoever is in charge of money, generally controls the world. That’s beginning to change now. There’s been a lot of hype about blockchain — more hype than action — but the fact is that there’s every chance that, once the kinks have been ironed out, we’ll see dramatic changes across the globe. The decentralised nature of blockchain will mean it’s easier for individuals to send each other money and buy houses, bypassing banks altogether. Individual savings will also be more secure, especially in countries where corruption or inflation are major issues.
Trading and Investing
It’s always a risk when you put your money on the line and invest. But those risks are becoming more manageable, thanks to technology. Automated trading software is making it easier to monitor investments, develop strategies, and utilise algorithmic trading. For companies and individuals, the rapid development of certain technologies has made trading and investing more advanced, and more specific. It has also opened up traditionally closed off industries to anyone with an internet connection and a willingness to learn.
For as long as there have been banks, or, for that matter, money, there have been people who have tried to defraud people out of it. Technology hasn’t stopped this — it’s just made it more advanced. Cybercrime is on the rise, but it’s a race between the banks and the would-be criminals. Smaller companies have benefited from technology advancements: while they’re more likely to be targeted, they’re also in a stronger position to keep their sensitive data secure.
As we said earlier, the banks once had all the power. If a person wanted a loan or a mortgage, they had to convince the bank that they were worthwhile lending money to. Thanks to the internet, this is no longer the case: people have many more options when it comes to how they get their money. P2P lending, for example, has cut out the middleman, and connects private lenders with individuals, at a price that benefits both.
We’re in the infancy of the internet, more or less, and how it affects the finance world in the long term is still up for debate. Whatever form it takes, it looks like it’ll provide greater equality across the board, as it allows previously cut off people to have a better grasp of their money, without intermediaries.