It is said that the term fintech was coined in 1993, but it didn't become a household name until Internet banking became mainstream. In the 1990s, fintech simply meant new technologies that improved financial processes. This and the fact that many financial professionals were out of work, led to a change of mentality and paved the way for a new industry, Fintech 3.0. Fintechs using RPA, AI and blockchain technologies have been seen as disruptors to the financial services industry and partners.
Let's take a look at each of the important stages of financial technology growth, before looking at how it could evolve in the future, and the systems and ideas that will drive this evolution. While that fintech segment may be the one that receives the most headlines, the big money is still in the traditional global banking industry and its multi-billion dollar market capitalization. Reuters was launched in 1851 and claims to be one of the oldest FinTechs in the world before the Panic of 1873, the Big Fall of 29 and the recent crisis. This concept of “Death by a Thousand Cuts” was carried out in the media with FinTechs joining forces to launch crusades against banks, pressure the government for more support, and creating industry bodies to coordinate their approach.
Every fintech era has been driven by the use of technology to make banks easier for their customers to use, and as this technology evolves, so do the ways in which individuals and businesses can manage their money. This era between 1866 and 1967 is called FinTech 1.0, in which, although they were strongly connected with technology, financial services remained mostly analog. Fintech 3.5 has been defined to account for changes in consumer behavior and the way they access the Internet in the developing world. Fintech now includes different sectors and industries, such as education, retail banking, fundraising and non-profit organizations, and investment management, to name a few.
As Silcon Valley players emerge from the West and Chinese players emerge from the East, FinTechs and banks must work together to compete with the common enemy.