What is Fintech?
Fintech is an abbreviation of the words ‘Financial Technology’, and generally describes a wide range of companies and organisations concerned with the intersection of technology and financial services. Fintech solutions have existed for decades, but are becoming increasingly important in the digital age as contactless payments, peer-to-peer transfers, financing and alternative currencies become far more commonly used by businesses and individuals alike. Here we will talk a little more about the beginnings of the sphere, and how it has progressed to a trillion-pound industry with innumerable applications.
The Birth of Fintech
Financial technology solutions have existed since the mid-20th century, as computational processes made their way into the regular behind-the-scenes functionality of banking organisations. Financial technology’s first public-facing application came in the form of the automatic teller machine, or ATM – the first of which appeared in the UK in 1967, and in the US in 1969. The ATM was the first contemporary technology to demonstrate the benefits of introducing tech to finances in an accessible way – and the beginning of a global movement.
Fintech and the Onset of Digital
However, the term ‘fintech’ would not appear until the formation of the Financial Services Technology Consortium in the US, in the 1990s. The Consortium was started by global banking corporation Citigroup, in order to facilitate the adoption of technological solutions by financial businesses. Online banking had been pioneered in the 1980s, enabling remote handling of financial transactions and bill payments via an internet connection. The democratisation of the internet enshrined the notion of remote banking, as demand begat innovation.
By 2008, not only was broadband internet in a majority of homes, but internet connections were also in pockets as internet-enabled phones became the norm – smartphone technology was on the cusp of mainstream adoption. Now consumers could a lot more than manage bank transactions online; digital storefronts saw a revolution in shopping habits, increased access to lines of credit and even remote retail trading.
Blockchain, AI, and the Future
Innovation did not halt in 2008. While many modern consumer conveniences are present now as they were then, the face of fintech is changing with rapid developments across the industry. Blockchain technology, which facilitates immutable data storage and the holding of new-age decentralised cryptocurrencies, is becoming more widely adopted, as is AI technology with regard to financial decision-making and administration. Fintech law firms have specialised in order to help companies manage in the midst of such profound advancement, and to adopt these new technologies not only to keep pace, but to thrive in a new world.
The future of fintech is difficult to pin down, but as blockchain and machine learning become commonplace, with major global corporations like PayPal and Visa facilitating payment and transfers in Bitcoin, many are looking ahead to the next developments in the field. Quantum computing opens up a range of computational possibilities for stock market modelling and performance projections, and could well be the next stage of investment for future fintech start-ups.