Fintech companies just doesn’t have that much in the profit industry lately, and it’s not hard to see why. Amidst fierce competition, catering to customers who want free stuff and the fact that traditional banks are still dominating the landscape, what’s a poor Fintech firm to do?
The answer is, believe it or not, bitcoin. Cryptocurrency was just a mere blip on the web in 2016. Heads turned when the value rose 15-fold during the next few years. Today, bitcoin is all the rage, and this might just be what Fintech companies are looking for.
But there’s an important point that’s missing, and we don’t really know when the bubble bursts. Startups may come in too late and self-destruct. Case in point- a huge number of investors have failed in thinking that chip makers and their mining rigs could turn in a reliable profit. What’s more worrying is the fact that there could be company reputation on the line as well. Large financial institutions can use their money to pay consumers who fell victim to product misrepresentation, but not all startups have the cash or the branding they could fall back to.
Regulators have also started cracking down on the whole cryptocurrency thing as well. Mark Carney, Governor of Bank of England, calls it an anarchy; the CFTC has been issuing subpoenas on bitcoin transactions left and right; the IRS have been busy collecting user information, and the G20 seeks a global regulation.
The bottom line is, Fintech firms should weigh in the pros and cons and see if the risk is worth the investment before dipping their toes in the cryptocurrency wave. Losing means traditional banks chalk up one more win and more pressure in the competitive front.
