Fintech: The History & Future

A conversation with a friend about our favourite school subjects led to me, naturally, eagerly declaring my love for history. It’s always been very interesting to me how everything has its own story and history; how it started, how it evolved or how it ended (in some cases).  With that being said, you can easily tell how excited I was to write about this topic today: the history of Fintech. Let’s get this rolling!

According to researchers, Fintech can be divided into 3 different eras:

Fintech 1.0, Fintech 2.0, Fintech 3.0.

Fintech 1.0 (1886-1967)

It all started with baby steps. From 1886-1967 investment in communications infrastructure, such as the telegraph and transatlantic cables, enabled the transmission of financial information across borders. The Fedwire, a centralized funds transfer service was established in 1918. The 1950s brought credit cards, reducing the need for people to pay in cash.

Although it can be argued that while such types of fintech may not be regarded as the fintech we know of today, but at a time of developing infrastructure and transportation, the ability to make financial transactions over distance was revolutionary.

Fintech 2.0 (1967-2008)

During this era, banks took charge in the development of financial technology, marking a major shift from analog to digital. The first handheld calculator and ATM were introduced in 1967. In 1970s, NASDAQ, the first digital stock exchange and SWIFT (Society for Worldwide Interbank Financial Telecommunications) was established. During the 1980s, bank mainframe computers started to become popular and then later in the ‘90s, the concept of making financial transactions online started to emerge.

Fintech 3.0 (2008-Present)

Post-financial crisis, lack of trust in banks aligned with the rise of smart phones usage paved the way to new providers. In 2009, Bitcoin is born followed by other cryptocurrencies using blockchain technology. It’s now the era of the start-up, with both consumers and investors craving for innovation & new payment methods. Even established banks are starting to act and brand themselves like start-ups and escape the Fintech 1.0 & Fintech 2.0 ways.

What’s Next?

Fintech is an industry constantly on the rise. With new technologies and innovations, fintech has grown immensely over time & it’s going to keep growing from there. Every fintech era has been driven by using technology to make the banking experience much easier for their customers, and as this technology evolves, so have the ways in which people and businesses can manage their money. This philosophy is the only common thing amongst all eras and it shall always remain this way; putting the customer experience at the centre of it is likely to be a very future-proof strategy.

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