3 ways fintech will solve the GDP growth problem and why Central Banks should double down on fintech
Since the 2008 crisis Central Banks from developed economies have pumped in over $7 trillion into the global economy. They have left interest rates at ridiculously low levels around 0% (and below 0%. This has further pumped in over $10 trillion into the economy. In fact you are now getting paid to borrow money if you account for inflation.
And what does the developed world have to show for all this? Stagnant growth, unaffordable housing, and hard working savers getting no return on their savings.
Fintech startups have largely been targeting SMEs especially lowering costs of transactions, making it easier for them to collect money from customers and automating processes. This has a flow on effect of hurting profits. Banks have been making money in three ways till now, high payment processing fees on everything, lending to property and big deals. The assault on lucrative banking fees by Fintechs is going to force lending to SMEs like we have never seen before. Some of those trillions being printed will finally flow into the hands of hard working small business.
What’s going to happen?
1. Banks will start lending to people who actually need it!
2. Transition from peer-to-peer lending to more risk based lending for SMEs
3. Exciting things happening in invoice financing
Fintech companies will make this happen, and thus create jobs and needed growth across the globe.