The Origins of Fintech and The evolution of Fintech
Fintech is constantly developing and attracts many entrepreneurs who want to get started. It is a word that has taken the finance world by storm. Economists, analysts, bankers, traders, or entrepreneurs have only one new word in their mouths: “Fintech.”
Among the ordinary masses, some know about it in-depth, some have surface-level knowledge. But this does not change the fact that the impact Fintech has on people is earth-shattering.
In recent years, the banking sector has been transformed due to new digital technologies. People’s lives have become more accessible and straightforward.
But then, what is Fintech? Where did it come from?
And what has been its evolution in recent years?
Before going any further, we will first lay the foundations of the subject. What exactly are we talking about when we talk about Fintech and its origins?
The word “Fintech” is simply a contraction of two words: Finance and Technology. This term refers to new startups and companies operating in the financial services sector. They have also gradually taken place in the once very closed world of Finance. Read more: An Easy Guide to Fintech | Creatibuzz
Even in the health and medical sector, the same buzzword exists. This is called Biotech or E-health.
Fintech companies are aimed at both end consumers and companies, depending on the type of new services they develop:
- Online payment
Origin of Fintech
We owe the invention of this term to Abraham Leon Bettinger, then Vice President of the American bank Manufacturers Hanover Trust (created in 1961 by merger and dissolved in 1992). He mentions the company’s research department that has developed a hundred models, including 40 that he groups under the “Fintech” category.
Abraham Leon Bettinger uses this acronym to describe: “technologies combining banking expertise with modern scientific management techniques and IT.” In 1972, Abraham Leon Bettinger founded this term based on solid observations and analysis of actual practices. It seems that subsequently, the word “fintech” did not find a taker until its growing media coverage in the 2000s.
The Importance of understanding the history of FinTech and The evolution of Fintech
Learning about the origin of fintech is crucial because it allows you to gain a better understanding of your business. Know where your company fits within the current FinTech journey and where you might be headed in the future. You must seek events that occurred earlier if you actually want to understand why something took place. Only by studying history can people truly perceive the reasons for events. Only by studying history can we comprehend what aspects of an organization or culture persist despite constant change. This helps us predict and avoid failure.
The significant milestones in The evolution of Fintech
The term Fintech is not new. It already appeared more than 25 years ago, in the background of the critical financial industries. Nevertheless, in the mid-90s, a disruption of the sector began.
The 90s and the Internet Revolution
Electronic transactions already existed during the 80s only concerned large financial groups and worked thanks to fax.
From 1995 and the advent of Internet technology triggered a profound change in how you manage and spend your money. For the first time, individuals had the opportunity to consult their accounts without going to the bank.
At the same time, e-commerce giants were born, a precursor of online payment: PayPal. People worldwide then took on new consumption habits thanks to financial technologies.
The evolution of Fintech from 2009 to the present day
The subprime crisis of 2008 also influenced the rise of Fintech in its way. Indeed, the financial crisis coming from the United States has gradually provoked an economic crisis of global scope. Faced with its heavy consequences, many households have lost confidence in their historical financial institutions to manage their money.
As a second consequence of the 2008 economic crisis, thousands of engineers and “brains” in the world of finance lost their jobs overnight. Thanks to their knowledge and experience, some have tried everything for the whole by setting up their own business in Silicon Valley, the West Web Valley, or anywhere else.
These start-ups have shown more agility, responsiveness, and versatility than large organizations to meet the needs of populations. Or even imagine new markets thanks to innovative and unique financial services. Better yet, these innovative start-ups have reshuffled the cards of the financial world and improved the competitiveness of the sector.
Moreover, if Fintech has been able to experience exponential growth in about ten years, it is also due to a device: the smartphone.
Today, more than half of the world’s population has a mobile phone connected to the internet. Smartphones and connected devices allow you to communicate, be entertained, buy, and manage your budget and finances at any time and wherever you are.
Please note: The Covid-19 pandemic has had a boost effect on the Fintech universe by multiplying its use by the population. Remote banking and online shopping during lockdowns increased the contactless payment limit in stores.
This would not be possible without the brilliant inventions of Fintech! Whether it is your bank application, an application for transferring money between individuals, online solidarity pots, or the payment of your retail purchases thanks to your smartphone, thousands of initiatives have emerged in recent years. They have gradually become anchored in our habits. So see The evolution of Fintech in this article.
The Origins of Fintech and The evolution of Fintech, an opportunity for all
Fintech is present in many areas, such as information and advice around financial management and simplified and almost instantaneous services for payments and remittances (Paytech).
All these solutions make everyday life easier for the general public but also simplify some of the once complex tasks within companies:
- Customer reminder
- Business Expense Management
To conclude, we can say that the worlds of finance and the services offered by Fintech are not in opposition. On the contrary, they make it possible to provide an extremely diversified offer to professional or private users. Fintechs will continue to evolve according to the pace of technologies and the population’s needs.