How Has Fintech Evolved?

Feb 7, 2022
4 min read

Understanding Fintech

Fintech refers to technology aimed at automating the delivery of usage of financial services, therefore increasing the accessibility to a larger number of people.

Fintech which is referred to as technologically aided financial solutions seems to be a new concept but has been intertwined ever since the modern era has started. Fintech has become the new normal and it is expanding day by day.

It's frequently referred to be a merger of financial services and information technology. Startups and existing financial institutions, as well as technology firms seeking to replace or improve the usage of financial services supplied by present financial institutions, are all part of the financial technology industry.

History of Fintech

Since banks went online, financial technology has been developing in front of our eyes. As we move toward a cashless world, new applications and platforms have emerged to help us better understand and manage our accounts, as well as new banks that provide a more streamlined experience. Understanding where fintech came from might help us predict where it might go in the future. We will be better prepared to predict which goods and services will thrive in the next years if we grasp the dynamics that have been driving this transition.

We are going to discuss how Fintech has evolved and how Fintech will be in the emerging market.

Fintech 1.0 (1886-1967)

This is the period when we can start talking about financial globalization for the first time. It all began with technology like the telegraph, railways, and steamships, which permitted for the first time the fast transfer of financial data across borders. The first non-stop cable (1866) and Fedwire within us (1918), the primary electronic fund transfer system, which trusted now-archaic technology like the telegraph and Morse code, are among the major events in this timeline. Credit cards were introduced in the 1950s to alleviate the hassle of carrying cash. Diner's Club was the first to offer one in 1950, followed by American Express Company with their credit card.

Fintech 2.0 (1967-2008)

Traditional financial institutions are leading the transition from analog to digital during this time. The introduction of the first portable calculator and the first ATM by Barclays bank in 1967 heralded the start of the contemporary era of fintech. In the early 1970s, several major changes emerged, including the formation of NASDAQ, the world's first digitized stock exchange, which marked the beginning of how financial markets function today. SWIFT (Society For Worldwide Interbank Financial Telecommunications) was founded in 1973 and remains the first and most widely used communication protocol between financial institutions for enabling huge volumes of cross-border payments to this day.

The advent of bank mainframe computers in the 1980s exposed the globe to online banking, which boomed in the 1990s because of the Internet and e-commerce business models. People's perceptions of money and their relationships with financial organizations have shifted dramatically as a result of online banking. Banks' internal operations, interactions with outsiders, and retail consumers had all been fully computerized by the turn of the century. The Global Financial Crisis of 2008 marked the end of this period.

Fintech 3.0 (2008-Current)

The general public acquired a suspicion of the conventional banking system as the cause of the Global Financial Catastrophe, which quickly transformed into a broader economic crisis, became more publicly known. This, along with the fact that many financial experts were out of jobs, prompted a shift in mentality and prepared the way for Fintech 3.0, a new sector. Another significant event in the financial world was the introduction of Bitcoin v0.1 in 2009, which was quickly followed by the rise of several cryptocurrencies (which, in turn, was followed by the crypto crash in 2018).

Another major element that has altered the face of fintech is the widespread use of smartphones, which has given millions of individuals across the world access to the internet. Smartphones are also the most common way for consumers to access the internet and use various financial services. Google Wallet was launched in 2011, followed by Apple Pay in 2014.

Fintech in Emerging Market

The way mobile phones have transformed consumer behavior and how people access the internet is also why the Fintech industry has got a boom in recent times. China (69 percent) and India (49 percent) are the nations with the largest Fintech usage nowadays (52 percent ). China, India, and other emerging countries never had the chance to determine Western-style physical banking infrastructure, making them more receptive to new ideas. In the case of China, fintech adoption is far higher than the world average (33 percent) as well as the average adoption among developing economies (46 percent ).


We tend to think of banks and fintech firms as antagonistic forces battling for market share as technology becomes increasingly essential in the banking industry. The truth is that both sides require each other just as much as they require competition. Fintech firms, on the one hand, have received bank investment and frequently rely on banking, insurance, and back-office partners to offer their main goods. Banks, on the other hand, have bought or invested in fintech firms to improve their existing operations and products by using new technologies and methods of thinking. Hopefully, this looks back at the development of fintech will help to summarise how far we've gone and put the busy times ahead of us into perspective.