It’s hard to believe that one of the biggest financial institutions in the world could make an almost $1 billion mistake.
But that’s exactly what America’s fourth-largest bank did.
Last year, Citigroup meant to make a small interest payment to lenders who had backed beauty company Revlon.
Instead, the bank accidentally paid the $900 million loan in full.
Now, some lenders were more understanding of the mistake and returned portions of the money. Others refused to return any — adding up to about $500 million.
Citigroup sued to get its funds back. But this February, courts ruled in favor of the lenders.
Thanks to plenty of human error and confusing, outdated software systems, it’s all too easy for huge financial institutions like Citigroup to flounder these days.
And while any other company could’ve gone bankrupt for dropping the ball like that … Citigroup is still around.
In fact, Wall Street analysts are eyeing bank stocks like JPMorgan, Bank of America and Citigroup as a way to bet on America’s economic recovery right now.
But big banks are bad news. They’re so influential, it’s not likely for them to fail — even if their customers could suffer in the long run.
That’s why, today, I want to show you how new technology is making it easier to take control of your financial future — and profit in the years ahead.
Big Banks Won’t Learn Their Lesson
Citigroup isn’t the only example of a big bank getting in trouble with its money … or its customers’ money. Plenty banks take it a step further and lie about their balance sheets — like Lehman Brothers. Some have even taken advantage of Main Street directly…
Over a five-year period, Wells Fargo secretly created millions of unauthorized bank and credit card accounts. It also submitted applications for over half a million credit card accounts without customers’ knowledge.
In 2016, the bank was finally ordered to refund $5 million to customers and pay $185 million in fines for the incident.
In fact, since the 2008 recession, major banks have been fined over $36 billion for not complying with regulations.
But these banks have a combined market cap of over $2 trillion. That puts this industry in ranks with the gross domestic product of countries like the U.K.
So, these fines are a drop in the bucket for big banks. There’s no incentive for them to learn their lesson. (Just a year ago, Wells Fargo was fined another $35 million for steering clients toward risky investments.)
It’s easy to see why small businesses and customers are trying not to use big banks if they don’t have to. And many of them are turning to alternatives provided by the financial technology, or fintech, industry…
Fintech Will Be Essential to Our Future
“Fintech” is a trendy word, but it really just means any technology that makes finance easier. So, fintech companies use this technology to create new applications that Main Street can actually use and trust.
Most major banks have shifted their focus to products and services that cater to the needs of big, billion-dollar companies. That’s how they can profit from raking in fees.
But this means that small- and medium-sized businesses lack options for banking and managing their day-to-day financial needs.
And that’s where fintech companies like PayPal, Square and Stripe come in.
They’ve stepped in to fill this gap and meet the needs of small and medium customers. This focus has led to better loan financing terms, more efficient payroll software and customizable payment solutions for smaller merchants.
Overall, fintech companies have created small business solutions in areas like price forecasting, fraud prevention, risk management and even customer service. By offering more transparency and efficiency, it’s no wonder the fintech sector is growing at a rapid pace…
Statista reports that investment into fintech companies has more than doubled — from $67 billion in 2015 to nearly $136 billion in 2019.
And according to a 2019 report from global consulting firm EY, worldwide adoption of fintech services has jumped from just 16% in 2015 to 64% in 2019.
Consumer awareness of fintech services is extremely high. Of the 27,000 people EY surveyed, 96% showed awareness of fintech solutions. And 75% of them had used one before.
But this trend is still developing. Research and Markets projects that the global fintech market will grow at a compound annual rate of nearly 24% from 2020 to 2025, to reach a market value of over $300 billion.
Wall Street might be betting that big banks will increase earnings and revenue. But I believe customers will continue to avoid questionable banks like Citibank and Wells Fargo.
And as consumers continue to shift away from traditional financial systems and toward fintech companies … we’ll have a chance to profit.
For broad exposure to this growing industry, consider a stake in the Vanguard Information Technology ETF (VGT). This exchange-traded fund (ETF) holds a basket of top technology stocks — including fintech ones like PayPal and Square.
But if you want to really maximize your profits in the fintech space, join me in becoming an Alpha Investor today.
I have several companies on my radar that could hand everyday investors triple-digit profits over the next few years. And I’ll be sharing their names with my subscribers to add them to our portfolio as soon as they trade at bargain prices. You won’t want to miss out on this coming opportunity.
Founder, Alpha Investor