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Fintech: Crypto Shapes the Global Flow of Funds.

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Fintech, including cryptocurrencies, is playing a major role in reshaping how funds flow worldwide, according to Elizabeth Rossiello, a contributor at Forbes. The growth of cross-border payment flows reached $150tn in 2022, a 13% YoY increase, largely driven by the rise of new financial technologies and infrastructure built by fintech startups and scale-ups. Remittances, mobile money, and cryptocurrency payments have all seen significant growth, with remittances to emerging market countries reaching $589bn in 2021. Mobile money in Africa has also revolutionized financial transactions, with registered mobile money accounts increasing by 13% YoY and transaction volume reaching $1.26tn in 2022. Similarly, crypto payments have surged in Africa, with transaction volume increasing by 1,200% from 2020 to 2021. Crypto payments offer advantages such as worldwide accessibility, faster transaction speeds, and lower fees compared to traditional remittance services. The partnerships between fintechs and banks have also introduced new products and services, with cross-border lending experiencing significant growth.

However, the fintech sector still faces challenges such as system incompatibility, changing regulations, and a limited hiring pool. Despite these obstacles, crypto remittances were estimated at $682bn in 2022, with countries such as India, China, Mexico, the Philippines, and Egypt being the top recipients. Fintech’s impact also extends beyond remittances and cryptocurrencies, with partnerships between fintechs and banks resulting in easier risk pricing and reduced costs in rolling out new international or domestic debt products. The collaboration between fintechs, banks, and regulators is also reshaping how money moves across borders and markets.

The future looks promising for fintech as growth in cross-border payment flows is expected to continue in markets that embrace it. Fintech is projected to have a direct positive contribution to economic expansion, with a 1% increase in fintech and credit leading to a 0.31% increase in economic growth in certain regions. Additionally, fintech is driving changes in social demographic structures, new business models, and marketplaces. Overall, fintech is enhancing traditional financial systems and making them more responsive to the demands of a globalized world.

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