How Fintech Has Improved the Foreign Exchange Market

From the use of artificial intelligence to bank apps to chatbots, #Fintech has become a behemoth force to reckon with in today’s world.

Fintech was coined from “Financial #technology”. It simply refers to the use of technology across all functions and facets of financial services.

It is impossible to disregard Fintech as a solid aspect of change in the world today.

All trends also indicate that it could only get better.

Particularly, the foreign #exchange sector is enjoying this advancement in technology. Those conversant with the foreign exchange sector can attest to the revolution and scalability associated with fintech.

It is pertinent to note that foreign exchange is not Forex. Forex refers to a decentralized global market where the currencies in the world are traded with leverage. Forex is also referred to as currency trading.

Foreign exchange on the other hand, is the conversion of different currencies. Here, no leverage is involved. This does not mean foreign exchange cannot generate profit as a business.  With a good understanding of the pros and cons of the financial market, it is highly lucrative as well.

How Fintech Has Made the Foreign Exchange Market Better and Stronger:

 

  • A Drastic Reduction in The Cost of Foreign Exchange Fees

A major challenge for many that deal with foreign exchange frequently is costs required in executing transactions. Such transactions include transfers and remittances. Fintech has worked in this space to cut down the costs associated with foreign exchange. This advantage is not only beneficial to only customers, but to the #banks as well. Fees have drastically reduced and networks now easily render services that were out of their capacity in previous years.  The access of customers to smartphones is also a major plus for the fintech industry, as processes could be carried out in a matter of seconds.

As a result of the drastic reduction in dealing with foreign exchange, several people are drawn to this market. Hence, there is an overall boom and the market gets more stable with every new fintech development.

For cross-border remittances, minimization and elimination of fees is now possible. This is all possible; thanks to fintech.

Fintech has helped in getting closer towards achieving the United Nation SDG of a global 3% transaction cost.

 

  • Reduction of the Incidences of Fraud in dealing with foreign exchange

All of over the world, financial institution experience all kinds of fraud attacks. In the foreign exchange sector especially, fraud is still a thorn in the flesh. In today’s fintech powered world, devices can be tracked and traced after certain transactions with foreign exchange.

Biometrics like vocal patterns, facial recognition, thumbprints and irises are now used for authentication. These kinds of verifications can also be performed on the user’s smartphone. Online payment apps are taking advantage of fintech in this respect.

 

Trust is necessary for dealing in the foreign exchange market. The blockchain which is highly trusted, has entered the fintech space. In Blockchain, no historical data can be altered without a generalized agreement from all participants of the network. A system administrator or a user in a single entity can’t make changes to the data on a blockchain without having an agreement from every participant. This provides a perfect platform trading and reduction in criminal activities, as nothing is done in the hidden.

 

 

  • Artificial Intelligence

Gradually, problems of money laundering are going into extinction. The anti-money laundering departments of many banks now use artificial intelligence. Machine learning is also helpful. This is because fintech has helped in combating laundering as well as other frauds. The availability of data in the technological space makes it easier. Although, there are several hindrances, the process is steadily at work. Fintech’s relevance in foreign exchange continues to evolve. Fintech is moving to the point of being at the very center of foreign exchange. Reaching that milestone will indicate real progress.

 

Conclusively:

Indeed, with fintech, the world’s finance has taken its place within the sphere of this “global village”. It is more important that the world at large embraces and understands the advancement in fintech.

 

[linkedinbadge URL=”https://www.linkedin.com/in/demioye” connections=”off” mode=”icon” liname=”Demi Oye”] Demi Oye is Freelance Writer in Fintech