According to analysts, the raging prospect of fintech super apps like the one planned by Robinhood Markets Inc (NASDAQ:HOOD) will change money forever. And as trading tech keeps growing, banks could struggle to catch up.
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Fintech Super Apps, The Future
According to Dan Dolev, fintech equity analyst at Mizuho Securities, younger, tech-savvy generations are swiftly drifting away from traditional banking methods.
With the rise of cryptocurrencies and fintech super apps, users want to manage and check accounts and borrow money and buy stocks, all in one platform and without ever going to a bank.
The concept has already taken off in China with Ant Financial and Alipay, owned by the e-commerce giant Alibaba Group Holding Ltd (NYSE:BABA), Dolev told Business Insider.
Robinhood is aiming at building a fintech super app to become the world’s number one money platform.
In its Form S-1, the company said, “We see a significant opportunity to introduce innovative products to address our customers’ future needs — including investing, saving, spending and borrowing — allowing us to grow with new and existing customers from our single money app.”
According to CNN, Robinhood became a meme stock last week skyrocketed 82% and it “rallied so much that trading was halted multiple times for volatility.”
Fintech Firms Vs. Traditional Banks
The financial crisis caused by Wall Street giants has played a critical role in the growth of decentralized finance and the future of fintech super apps, Dolev says. He points how the central bankers “rode to the rescue by rapidly expanding the money supply.”
“Meanwhile, cryptocurrencies have surged in the past year as proponents build momentum toward a future free from the control of what they view as financial overlords.”
Innovative fintech companies are drawing the attention of investors, whose appetite for disruption in the finance world has become insatiable. According to Dolev, they see these firms and fintech super apps as a challenge to traditional financial institutions.
He points to how a new breed of “neo banks” is set to replace them. “Firms like JPMorgan Chase & Co (NYSE:JPM) and Goldman Sachs Group Inc (NYSE:GS), which powers Apple's mobile payment service, are taking steps to reach a younger audience, but it may not be enough.”
“Traditional banks are perceived as ‘your grandfather’s bank.’”
In the meantime, regulators are switching their focus toward cryptocurrencies, and while Dolev predicts that the move could help popularize the technology under a legal framework, the U.S. government will maintain the dollar as its totemic currency.
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