June 7th 2020
I’m a beginner Software developer from Georgia with a big love for all things blockchain!
Ever since information technology started gaining its foot in the world the financial market has started adopting its services into its ranks. The new breed is called Financial Technology or Fintech for short. While it may seem like Fintech is something new, in reality, it has been around for quite some time. We can go as far as to say that it has been around since the evolution of the modern society.
Fintech was Born (1886 – 1967)
In the 1950s, the first credit card was created, and thus the foundation for the modern-day, non-cash payment system was born. Diner’s Club was the first to introduce them in the 1950s and American Express followed suit in 1958 thus establishing a new era of financial services.
Fintech in its Teenage Years (1967 – 2008)
This is the period when the world started moving from analog technology to digital. Traditional financial institutions were one of the first to adopt such devices and surprisingly to an average reader it’s not anything special as of today – a simple handheld calculator and the first ATM installed by Barclays bank back in 1967.
This is when the big boys came into the game. In the 1970s the first digital stock exchange, NASDAQ, was established, which laid the foundation for the operation culture of modern financial markets, which are still utilized today. In 1973 SWIFT (Society For Worldwide Interbank Financial Telecommunication) was created, which is the most commonly used communication protocol between financial institutions. It facilitates a very large amount of international transactions.
1980s have introduced the first bank mainframe computers and the start of the first online banking system. It gained popularity in the 1990s due to the development of the internet as we know it now as well as e-commerce business models. This was a turning point for people to view the money and financial institutions the same way as they are now.
By the early 2000s banks have fully digitalized their services and the era of global financial markets officially begins.
Fintech as a Young Adult (2008 – Current)
With the Global Financial Crisis in 2008, which made the general economic crisis more understood in the worldwide aspect the general banking industry lost its good reputation. With a lot of financial professionals losing their employment status people started seeking more reliable ways to seek money, which would be different from traditional banking systems. Due to this, we saw the emergence of new financial services and currency systems and in this case it was cryptocurrency.
With the release of Bitcoin back in 2009, the world saw that it is possible to have a currency system without major banks backing it. Due to this, we saw a huge influx of popularity in consecutive years. Not only this, but bitcoin was not the only cryptocurrency gaining foot. Altcoin, crypto token and many others also started gaining popularity with Altcoin being defined by Stephanie Yang of The Wall Street Journal as “an alternative digital currency,” while others in the same journal defined it as an “alternative bitcoin.”
However, with such a newborn system and the world just now learning about the risks associated with the crypto trading we saw another terrible market crash called “the great cryptocurrency crash” in 2018.
It is important to note that with the development of smartphones the online world became much more accessible to the general public with most notably mobile data, and wifi allowing everyone to connect from all over the world. Smartphones are now one of the most used devices to access the internet and use financial services. Due to this in 2011 Google has created its Google Wallet and Apple followed suit with Apple pay in 2014.
The global economy is becoming increasingly convoluted and the introduction of new technologies makes it easier to follow the ever growing demand for better and more refined services. Information technology, banks, and Fintech companies are on the bleeding edge of this development and all three of them are leading the pilgrimage. They are not the enemies, they are partners in crime.