Fintech: An Ancient Marriage Between Finance and Technology

The online version of the Oxford Dictionary defines fintech as “computer programs and other technology used to support or enable banking and financial services”. Fintech is actually nothing new. Technology has always changed the financial industry. However, the internet, combined with the widespread use of devices like smartphones and tablets, means the speed of this change has accelerated greatly in recent years. The new rise of Fintech has seen disruptors challenge traditional practices. These disruptors are fast-moving companies, often start-ups, focused on a particular innovative technology or process.  

Finance and technology have been inextricably intertwined since the very beginning. If we look at the earliest days of finance dating back thousands of years ago, the initial impact of technology was in the context of building systems of keeping records of government finances or payments for taxes and agricultural production or building facilities and one of the first physical technologies to develop was money the simple coin or thousands of years later, not long after 1000 A.D., paper money. Money is a form of technology that allows us to physically handle the ideas embedded in finance.

The 19th Century saw a boom in the technological development of underlying financial infrastructure. During this period, new technologies such as the telegraph, transatlantic cable, steamships, and railroads built financial inter-linkages across the borders, permitting speedy transmission of financial transactions, transfers, and payments around the globe. Hence, the current period of fintech is not the beginning of technology and finance, it is just an iteration and development of this relationship. The explosion in start-ups since the global financial crisis is new in terms of numbers, volume, transformative potential but finance and technology married a long time ago!

Fintech was initially about technological infrastructure for financial transactions.  Most recently, Fintech has transformed exponentially from being merely a digital facilitator for B2B and B2C such as services for banks, financial companies, digital wealth management to being an industry collaborator, hybrid and integrated operator. Fintech is now much more about sharing core banking services and banking-as-a-service (BaaS), sharing APIs, Open Banking, cocreation and innovation, leveraging technology and data to create value for its cross-border services, apply machine learning algorithms and for the provision of integrated, rebundled financial services. 

Based on a report by Accenture, the amount invested in fintech has risen from US$930 million to US$57 billion between the years 2008 and the first half of 2018. This investment has the potential to unlock huge opportunities and provide a breeding ground for some of the most exciting products and services the world has ever seen.