Technology and Finance: The Evolution of an Industry

Financial technology, or fintech, is a term that has been on the lips of financial experts and commentators in recent years. An explosion of new technological capability has created one of the biggest sea changes in financial history, as new products and services herald a new age for the industry. But what is fintech, and how has finance evolved?

The Birth of Fintech

Fintech, strictly speaking, has existed for some time. Digitisation was occurring as early as the 1960s, as major banking institutions sought innovative technological tools to assist in money management – particularly with regard to high-wealth clients. The progression of this technology was slow but natural, as electronic banking spread more widely. Eventually, the infrastructure allowed for the roll-out of the ATM – exposing consumers to a new age of banking.

But it was in the 1990s when fintech earned its name, as a consortium of experts and professionals within what was, at the time, a niche field gathered together to discuss the future of the industry. The internet was in its infancy, and market commentators could see the opportunities it presented.

Disruption and Growth

It was only a matter of time before fintech switched from an ancillary part of a larger financial sector to an industry within its own right. The manner in which this occurred, though, would change the financial sector profoundly and permanently.

Where banks were previously working with consultancies and contractors on an exclusive basis, the emergence of new computing technology and discipline enabled market outsiders to create their own products and services. This not only created vital competition for the rapid growth of ideas and systems, but also enabled private enterprises to disrupt the industry entirely.

Where conventional banking institutions could previously rely on custom owing to the scarcity of banking and credit options, new fintech ventures introduced competitive, online-only digital banking products that outclassed the major banks in every way. These alternative banks forged the way for a new industry of democratised control over money and forced banks to adapt to a new age.

The same profound disruption could be seen with regard to stocks, assets and investments. Where once stockbrokers, wealth managers and hedge funds were the primary routes to engagement with the stock market, contemporary retail trading platforms have enabled the average consumer to interact with the market without a middleman.

Consumers can make their own decisions about their capital, and invest in products they believe in without the prohibitive expense of conventional wealth management. Novel products such as spread betting enable consumers to interact with the market’s movements, instead of buying and selling stocks and assets outright – exposing more consumers to the powerful financial impacts of the markets in question. Follow this link to read more about spread betting.

The Future of a Changing Industry

The industry’s profound changes are multifarious, though; while new consumer finance products have become available, so too has blockchain technology made its mark with regard to decentralised exchange. With more experts and pundits recognising the power of cryptocurrency and crypto-powered tech, a further existential shift is on the horizon.