Evolution of Fintech

Financial technology or Fintech refers to financial solutions enabled by technology. We can also describe Fintech as a fusion of financial services and information technology. This fusion of technology and finance might seem like a recent development, but Fintech has evolved over different eras. In this article, we will see the evolution of Fintech through the different periods. 

Fintech during 1886-1967

This was the time when financial globalization first started. Economic globalization started by leveraging technologies like the telegraph; railroads and steamships played vital roles. Railroads and steamships allowed for the quick transfer of financial information across borders for the first time. This period also saw the first electronic fund transfer system. Fedwire then relied on available technologies like the telegraph and Morse code to relay financial information. By the 1950s, credit cards came along. Diner’s Club was the first to introduce its card in 1950. American Express Company followed and presented their credit card in 1958. The goal behind introducing credit cards was to ease the burden of carrying cash. In that era, Fintech was all about infrastructure.

Fintech during 1967-2008

This period saw the shift from analogue to digital, and the traditional financial institutions were leading in this era. In the year 1967, a team at Texas Instruments invented the first handheld calculator. Also, 1967 marked the beginning of the modern period of Fintech when Barclays bank installed the first ATM.

Various notable trends took shape in the early 1970s, as the establishment of NASDAQ, the first digital stock exchange of this world. NASDAQ marked the beginning of how our financial markets operate today. Also, in 1973 SWIFT (Society For Worldwide Interbank Financial Telecommunications) was founded and is the most commonly used communication protocol between institutions facilitating large volumes of funds across borders.

By the 1980s, the financial industry saw the rise of bank mainframe computers and online banking first developed. But online banking flourished later in the 1990s with the internet and E-commerce business models. Online banking went on to change how people perceive money and their relationships with financial institutions. But this era was all about banks revolutionizing the financial sector. This era ended with the Global Financial Crisis in 2008

Fintech from 2008 to Today

As the origins of the Global Financial Crisis that soon morphed into a general economic crisis became more widely understood, the general public distrustedthe traditional banking systems. Many financial professionals needed work and, with a changed mindset, they paved the way to a new industry. So this era began with the emergence of new players in the financial sector alongside the old ones (like banks).

One of the most notable events in this period was the release of Bitcoin v0.1 in 2009. Soon after Bitcoin’s release, there was a boom of different cryptocurrencies in the market.

Also, the mass market penetration of smartphones played a crucial role in how Fintech shaped. Smartphones enabled internet access to millions globally, and with the internet came exposure to Fintech for that population. Today, smartphones have become the primary means by which most people access the internet and different financial services. Also, an introduction to various financial services like Google Wallet and Apple pay by tech giants helped popularise Fintech worldwide. 

Wrap up

Fintech has evolved throughout different eras. Today Fintech is a critical player in the financial sector. With the increasing access to the internet in remote areas, many see the advantages and convenience that Fintech provides. And with more innovations in mobile technology down the line, Fintech can grow into a giant in the financial sector.

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