Whether you’ve been riding the ups and downs or standing shocked on the sidelines, if you’re engaged in the finance world you’ve probably been swept up by cryptocurrency fever. Sure, it might be a bubble on the verge of bursting, but its impact has already been felt, and the foundation for decentralized currency has been laid.
As a matter of fact, this surge of hype is nothing new to the financial industry. Only a few years ago, it was FinTech that was the buzzword on everyone’s lips — it looked like a force poised to disrupt the dusty institutions that had managed money since the beginning of time. Sort of like how cryptocurrency looks now.
And, while FinTech did shake up the banks a bit, more than anything it opened a new avenue for collaboration that the savvy banks seized. Banks are good at banking, tech companies are good at technology. Why not leverage FinTech to modernize financial technology and let banks do what banks do best?
Cryptocurrencies and those who invest them see a different future. Instead of preparing financial institutions for a rapidly changing future, evangelists of this decentralized money envision a world where centralized, government regulated currency is a thing of the past.
There’s a lot of similarities between conventional FinTech and the cryptocurrency movement. But one seeks to improve now, and one remains highly speculative. Here’s where collaborative FinTech and cryptocurrencies differ:
What is cryptocurrency, and what does its future hold?
There’s been a lot written on exactly what cryptocurrency is, and I’m not going to delve incredibly far into it. Suffice it to say, it’s decentralized digital money. The first of its kind is Bitcoin, although now there are dozens of popular “altcoins” now such as Ethereum, Litecoin and Ripple. Unlike traditional currency, it’s not regulated by the government and it’s not stored or controlled by banks. Instead, blockchain technology is used to verify transactions and prevent forgery.
What’s compelling about cryptocurrencies is how volatile their price is based on how people view their potential for usefulness down the road. For the dedicated crypto-investor, this value fluctuation is a temporary annoyance. Eventually, once it becomes more established in the public consciousness it offers a currency free from government imposed inflation, impossible to be seized or frozen, and stored in a way that is anonymous. It’s a idealized, utopian idea about the liberty of personal wealth.
Of course, from the perspective of banks this view of the future throws their relevance into question. Forget the 
“disruption” that FinTech posed — banks have gotten savvy to its value once incorporated into their processes. The true success of cryptocurrency could radically change the way we think of financial institutions.
This future is far from assured, however, and banks know this. Jamie Dimon, JPMorgan Chase’s CEO called Bitcoin a “fraud,” saying it would “blow up” and that, “It’s worse than tulip bulbs. It won’t end well. Someone is going to get killed.” Whether or not this will prove to be prophetic can only be determined with time.
But while cryptocurrencies are certainly stirring the public imagination, they’re not offering much value right now. The vast majority of hype (and fear) is caused by speculation on their potential. That’s where conventional FinTech diverges sharply from cryptocurrency — yes, it’s meant to change the way we view banking. It’s just doing that right now, in collaboration with the banks themselves.
Collaborative FinTech is about preparing for the future, executing in the present
Where cryptocurrency offers a vision of a utopian future (or dystopian, depending on your take) its real potential is hard to gauge. FinTech, on the other hand, is showing its value right now, especially in collaboration with banks.
Anyone who knows the ins-and-outs of the financial industry will admit that banks are averse to change. Or, at least, find it difficult to adapt when they rely so much on careful, established processes and legacy technology. While FinTech came out of the gate looking like it may pose a challenge to banks, it’s now evident that it works best playing nice with them.
Cryptocurrency promises to change the way we conceive of money. But FinTech is doing that right now. By offering banks artificially intelligent ways to predict the needs of their customers, and the ability to customize product bundles, rates, and fees, traditional financial institutions are offering increased levels of financial freedom and autonomy right now — without the ups and downs crypto-investors face.
The future is now, and the future is FinTech.
About Zafin
Zafin (@zafin) is a leading financial technology provider that enables banks to form richer, more personalized client relationships. Built from the ground up for financial services, its platform empowers banks to enhance revenue and operational efficiency. Founded in 2002, Zafin sits among North America’s top FinTech companies, and is trusted by retail and corporate units at some of the largest banks worldwide. Headquartered in Toronto with global offices, Zafin has a proven track record with a 100 percent client retention rate as validation.
Cam Smith
Cam is the Digital Communications and Marketing Coordinator at Zafin. With a background in journalism and a passion for blogging, Cam strives to tell compelling digital stories. At Zafin he will share the latest trends and news in the FinTech world, and share Zafin’s role as leader in the industry. Follow him on Twitter @CamSmoth
