How the Financial Service Industry Evolved through the Years

Gone are the days when people needed to wait in line just to get things done at their banks. Never again should one worry about rushing to the bank just to get everything done quickly and “conveniently.” Thanks to technological advancement in the world of banking, everything has drastically changed for the better.

Simply put, technology has merged with financial services so well that it has become its own bustling industry.

Although traditional banking still exists today, the financial service industry is leaning toward transitioning completely with the integration of technology. As the world seems to be brought closer and closer by the second, banking and other financial services are made more convenient with innovative systems that are designed to help each company meet the demands of today. Transactions are done faster, and customers are less frustrated by the waiting game.

While there are countless technologies being developed today for better customer experience and quality service, there are those that pushed the industry into a whole new level of convenient customer service.

Here we’ll list the innovations in the financial services industry, the various transitions they have undergone, and the different factors that led the entire financial services business to its current state. 

Primary Shift: Bank Card Convenience

During the earlier days of banking, checks and passbooks used to be a common option by almost every bank account owner. Later on, banks acknowledged that they needed to provide customers with something that was more mobile, something as good as money. Hence, bank cards were born.

image1

According to MasterCard, the first bank card was introduced by Brooklyn banker John Biggins in 1946. He fondly called it “Charg-It” and when customers used it for purchase, the bill was then forwarded to Biggins’ account. Afterwards, the bank reimbursed the merchant and obtained payment from the customer.

It turns out, Biggins’ simple idea shaped the whole future of the banking industry. The plastic credit and debit cards came soon after the “Charg-It”. Soon enough, other transaction cards were invented. ATM cards, fleet cards, and free gift cards became popular with different types of users.

Today, everyone seems to have bank cards on hand all the time, enabling them to pay a merchant for goods and services with one tap or swipe. Since almost everyone has a card or two, it is about time to know how bank cards of today work.

As everybody is aware, there are a variety of cards available for each person, depending on his or her needs. A credit card for example, is a payment card issued to users to enable the cardholder to pay a merchant for goods and services. All of this is possible based on the cardholder’s promise to the card issuer to pay the amoun, potentially with other agreed-upon charges.

What card issuers do is to create a revolving account and grant card holders a line of credit, from which the user can “borrow” money for payment to a merchant or as cash advance. The catch about credit cards is that there is a credit limit with every account, and a requirement to pay the cash borrowed within a specific period of time. All things considered, credit cards prove to be beneficial if maintained properly.

image5

The other popular type of bank card is the debit card. A debit card is slightly different from the credit card. It does offer the same convenience of a credit card, but works in a different way. Debit cards draw money directly from your checking account when you make the purchase. This means that when you purchase goods or services for a certain cost, it is placed on hold until the amount is deposited by the purchaser. This is why it may be best to keep a running balance on the debit card so that transactions may be done faster and more smoothly.

Second Gear: Mobile Banking

As the world of finance and banking moves forward to integrating technologies to make everyone’s transactions faster and more customer-friendly, the banking world has recognized that there is a next step toward helping people benefit from using bank cards.  The mobile industry has boomed in the last decade because of its convenience and connectivity. Now, most people could not live a day without their mobile phones. This is exactly why bankers and corporations needed to shift their business to second gear through mobile banking.

image2

Mobile banking has been many financial service corporations’ answer to the increasing demand for convenience and easier transactions. It is technically defined as a service provided by a bank or other financial institutions that permits customers to do financial transactions online. Using a mobile phone or tablet, banking is made available 24 hours a day. This is possible because of a developed mobile application that can be downloaded to mobile devices, depending on the user’s type of operating software.

The earliest recorded type of mobile banking used to be done in SMS. In  1999, smart phones were introduced into the market, which included WAP support that enabled users to connect to the internet. European companies made sure to take the first step, launching their mobile banking platform. However, with the rapid growth of mobile applications in the last decade, banking corporations evolved to produce applications that fully support banking processes such as viewing account details and previous transactions, balance inquiries, and fund transfers.

However, there is more to mobile banking than what exists right now. With the development of new technology and increasing use of smartphone and tablet-based devices, mobile banking can now enable customers to link their accounts across various aspects of their online life. Certain functionalities on the business end help create new ways of lead generation, prospecting, as well as developing deep customer relationships. Plus, the world of mobile banking would achieve superior customer experience with bi-directional communications.

Tertiera: Variety of Trading Platforms

As mobile banking made spending online more convenient and more accessible, many companies have also tried to tinker with the possibility of establishing various platforms where people can both earn and spend their resources. Usually launched online, these trading platforms allow the power of online banking and trading in one. One of the leading platforms in this regard is PayPal.

PayPal is an online payment service that allows individuals and businesses to transfer funds electronically. The idea behind PayPal is simple: Use encryption software to allow people to make financial transfers between computers. That simple idea has turned into one of the world’s primary methods of online payment.

image3

PayPal now boasts over 100 million active accounts in 190 markets worldwide. Anyone can send funds to anyone with an email address, whether they have a PayPal account or not. However, in order to receive the funds, the recipient must have a PayPal account associated with a specific email address. Basic PayPal accounts are free, and many financial transactions are free as well, including all purchases from merchants that accept payments using PayPal.

Even the best technology companies lean towards playing a part in this trading platform. Google Wallet, a renowned platform in the United States, boasts the same capabilities, enabling users to wire money even if the recipient has no Google Wallet account. Payza, Paymate, PayMaya and many other platforms are taking part in this bustling business, enabling customers to choose from a wide variety of brands.

It can be expected that banking technology will only move forward from here, with a goal to make it even more convenient for more customers all around the globe.

Six Important Things To Do In Your 20s

Twenties. It’s that period in one’s life when you can either be too adventurous or too conservative. If you want to set yourself up for success in your 30s (or much later in life), it’s best if you make the most out of your 20s by building a career, experiencing new things through travel, connecting with your family and friends, and saving up.

Search or build a career that enables you to work from home

Remote employment has become increasingly popular these days, and you should take advantage of it. One of the best ways to have more control in your life is by working from home, because once you’re home, things can start to shift in your favor as you call the shots in how you do your work.

image03

Of course, there are various challenges with this set-up. There are relatively few types of jobs that translate to a career from home. That’s why you should first survey the different careers that are typical of at-home workers before you set yourself up for one of them.

Almost every professional who is now working from home has either worked very hard in their twenties to build their own business or has worked hard enough in the past to specialize on a certain skill that has made them highly valuable in the company to replace. The bottom line is that there’s just much freedom and flexibility about this kind of job that it could lead to bigger career changes in the next decade of your professional life.

Travel

Heading out to faraway places and discovering new parts of the world – especially on your own – is definitely a spiritually rewarding experience. It can also tell you that are mature enough to go on your own and learn from other cultures.

image02

During this time, you won’t have any other pressing obligations and could be carefree for a few moments. Use this opportunity to meet different people, live with them, and understand their thoughts and culture. Plus, you can learn how to survive independently outside the comforts of your usual environment.

In itself, traveling is a great provider of knowledge. There are tons of things that you can learn if you invest in a form of travel during your 20s. Try not to go from one hotel to another, but also try going from city to city, or country to country, staying with, when possible, with local families. People learn through struggling, and if you can push yourself to struggle with language, customs, foods, and arts, you can definitely learn a lot.

Build muscle.

There are many rewards of trying to live a healthy life. Unfortunately, it is a sad fact that “aesthetically pleasing” people tend to be those who are more privileged in life. According to Daniel Hamermesh’s research, “Attractive people are likely to earn an average of 3 to 4 percent more than a person with below-average looks. That adds up to $230,000 more over a lifetime for the typical good-looking person, Dr. Hamermesh estimates. Even an average-looking worker is likely to make $140,000 more over a lifetime than an ugly worker.”

When you do decide to start to working on your dream body, you should do it as early as possible. What you probably didn’t know is that you can buy yourself some time if you’ve been lifting weights regularly during your twenties. When muscles have been built earlier in your life, they tend to stay strong long enough that you can do relatively simpler workouts in your thirties. This plan allows you a lot more flexibility with your workout regimen later on.

Of course, fit and more buff people are generally healthier than the average man. This means that not only do you get more attractive, but you also live longer and not worry too much about avoidable ailments in your old life. There are many other benefits to being fit, and you should start aiming to be one in your 20s. Because living healthy is a lifestyle as much as it is a habit, you need to build up that pattern as early as possible so that your own body would be groomed for a healthier life.

Connect with your siblings

Staying in touch with your siblings in your twenties may not be as fun as it was when you were a toddler. This is the period when people are beginning to make their marks in their communities. They begin to establish their own identities. Some even go as far as becoming their parents or become romantically engaged with someone like their parents.

image04

At this point, you might be in denial of this new turn in life. You might even stay in that denial stage as long as possible.  This can lead to avoiding anything related to your parents. This includes avoiding your siblings because siblings can always tell when you’re acting like your parents.

According to a study from Harvard, one of the indicators of people who are happy is their relationships with their siblings as an adult. Those who remain close with their siblings are generally happier and more directed in life.

If believe the path to happiness lies in being able to get into exclusive clubs or have the fanciest things money can buy, you should probably choose a new path. These things don’t last. Your siblings are the ones who stay the longest. Give them regular visits and see a different light in your life.

Save as much as you can, even when it means being stingy sometimes.

Money shouldn’t be your primary motivator, but nearly everyone could easily say that you should still focus on sensible financial planning, especially setting away a rainy-day fund to cushion you when you hit inevitable bumps on the road. Start saving and look for guides on the internet on how you can live a generous life without having to spend a lot.

image00

You can set aside six to 12 months of living expenses. You don’t want to panic or change your lifestyle if something bad happens like injury, sickness, or job loss.

When it comes to treating others, always remember that you really don’t have to impress your friends. For example, you can just look for cheap but memorable – or practical – gifts to your best friend’s wedding like a water heater from your local store or something creative like a survival kit that you can buy online. Indeed, it’s not your task to impress your friends by spoiling them with an expensive night out. Rather, save now and be prepared when the time of need comes.

Realize that 20s is not practice

Your 20s shouldn’t be a rehearsal for your old age. It is real life and the poor choices that you can make can haunt you when you’re older. Don’t worry about something like relocation – it’s true that you can live anywhere, but it’s not true that you’re going to want to live just anywhere. Go on and live with your parents if money is a big issue, but make sure that you are looking ahead after a certain amount of time.

image01

People in their twenties spend too much time making dead-end decisions that they pretend don’t count. Instead, focus on using a systematic way to try new jobs and new relationships to figure where you fit. Don’t worry that things don’t feel right in your twenties because everything happens so fast. Time does speed up as you get older, and you’re not going to believe how fast your twenties are over.

The Pros and Cons of Angel Investing

The idea of being an angel investor is really tempting, and many angel investors have found a lot of success with their endeavors. Technically, angel investors are those who invest in small startups or entrepreneurs, and often, they are among the entrepreneur’s family and friends. The angel investors may provide a one-time investment to help the business propel or an ongoing injection of money to support and carry the company through its difficult early stages.

image00

They are called “angels” for a reason. Angel investors, according to other definitions, are also called informal investors, angel funders, private investors, seed investors, or business angels. They are usually affluent individuals who inject capital for startups in exchange for the company’s equity or convertible debt. Some angel investors invest through crowdfunding platforms online or build angel investor networks to pool in capital.

The biggest takeaway as to why most people would consider becoming an angel investor is that being a private investor allows for more favorable terms for both parties as compared to becoming a lender. Lenders would normally invest on the entrepreneur starting the business rather than the viability of the business itself. As an angel investor, they are more focused on helping startups take their first steps, rather than the possible profit they may get from the business.

Essentially, angel investors are the opposite of venture capitalists.

However, there are still challenges that could come along with this investment. It’s like when you get a physical gold IRA or simply invest in the stock market – you need to have a certain level of risk appetite to take on those challenges.

As such, before you decide to go out and start helping entrepreneurs, find out the pros and cons of becoming an angel investor to make sure that you make the most out of your investment money.

Pros:

You do become the Angel that a startup business needs

Becoming an angel investor would mean that you can really make one’s dream a reality. When entrepreneurs have exhausted money from friends and family, personal savings, bank loans, and credit cards for their startups, they may seek angel investors to help them fill their needed equity gap. According to studies, nearly 2/3 of funding for new enterprises is obtained from angel investors. Therefore, angel investor capital can provide a great source of funding for new businesses that have a high potential for growth.

image03

Flexible Business Agreements

Becoming an angel investor can yield the most flexible business agreement, and you can always get the better end off of a startup business. Angel investors have a more informal investment criteria compared to the traditional financial lenders, including banks and venture capitalists. Since they are investing their own money, their business deals can often be negotiable. Because of this flexibility, they are more likely to be excellent sources of capital for early-stage businesses.

Raising Capital Continuously

Most early-stage ventures require small amounts of money, typically less than $500,000. Angel investors can provide this needed amount by using their own personal funds for the investment. This really gives a lot of mileage for startup businessmen because of the higher potential for more capital. Venture capitalists, on the other hand, typically pool money from different sources, generally invest in later-stage companies that have already established stability and success, and invest in enterprises in need of at least $500,000 to $1 million.

image04

Getting Rid of High Monthly Fees

Another benefit from raising an angel capital is that there are no outstanding payment rates such as the ones that bank loans and credit cards require. Many entrepreneurs enjoy this element of angel investors, concentrating their time and effort into taking their new business forward rather than worrying about high monthly payments and fees that traditional lenders enforce. It’s like you’re passively gaining the income while getting rid of that extra hassle of outstanding fees.

High Risk, But Definitely High Rewards

You can consider this as either a pro or a con. Angel investing is definitely a high-risk maneuver, but surely a highly rewarding experience. An angel investor’s capital in a new business is considered to be a high-risk investment since the new company has not yet established a solid track record of success. Since they often provide the initial funding for a new company, it can be quite difficult to determine if their invested enterprise can become successful in the long run. Despite the fact that most new businesses fail in their initial years, angel investors tend to be quite optimistic about their investment choices and often request a large amount of returns to counterbalance the risk.

Providing Money That’s Not a Loan

As you take out your small business loan, your bank expects you to repay it, whether the venture succeeds or not. As an Angel investor, you operate inside a different framework. You offer the capital needed to get the ball rolling. The startup businessman would definitely feel blessed because of your existence, especially when most banks would decline him off a business loan. Surely, if the startup takes off, both parties reap the financial rewards. Then again, this might also be considered a con: while providing lesser headaches for the startup businessman, essentially giving away your money without definite collateral might fire back at you when the company falls flat.

Helping Others, Especially the Community

Many angel investors choose to invest locally – therefore, as an angel investor, you are extending your help to someone as they grow inside the community. The capital investment that Angel investors provide for a new business not only assists the launch of a new enterprise, but also helps create employment opportunities and stimulate economic growth by encouraging consumers to purchase their products. Many angel investors take pride in using their expertise in giving back to their community. These are the angel investors who look beyond monetary return.

image01

Cons:

No Recognition

Anonymity can either be good or bad for Angel investors. While there are well-documented directories of venture capital firms available, there is no national register for angel investors. Due to these differences, angel investors do not have the national recognition as their venture capitalist counterparts. They remain hidden and mysterious but choose to do so in order to have a degree of separation from entrepreneurs who may pester them with their business plans and telephone calls.

Extremely High Risk

Like mentioned before, becoming an Angel investor is a very high risk. Sure enough, you can gain a good amount of control to the business venture, but oftentimes, this wouldn’t be enough to necessarily steer the startup venture in the right manner. Also, the business enterprise could easily fail because you’re making a deal with startups. While everybody has to start from somewhere, not all startup entrepreneurs are good, and they can even be too ambitious for their own good. The high risk of becoming an angel investor may easily be rewarded with results, but they are risks nonetheless.

image02

Becoming an Angel Investor is Quite Costly

In exchange for providing the needed startup capital for a new company, many angel investors often require a certain percentage of stake in a company, starting at 10% or more, and expect a large ROI for their exit. However, as mentioned earlier, becoming an angel investor requires a huge amount of investment with no return in a short amount of time.