We live in an ever-modernizing world with innovations, novelty, and technology revolutionizing the way we live. Throughout recent decades, the change and the major shifts towards a more digital future have become even more evident than ever before. The technological firms and corporations are now based in some of the leading tech areas like Silicon Valley. With their smart and modern solutions to traditional and new problems, they are changing the way we live.
Many people might think that fintech is something born a few years ago. However, this is quite far from the clear and apparent truth. Fintech, as a concept, was born along with the introduction of credit and debit plastic cards. They were the first true innovation in the technological industry that revolutionized another sector. However, they proved to be rather controversial. The first credit card was introduced back in the 1950s. Pioneering technology was not essentially well-streamlined, developed, and most importantly secure. Rather, it was just a paper card without much protection mechanisms. Many people failed to trust cards that did not look anything like money they were used to.
The innovation called plastic cards would become popular and widely accepted only some decades later. In the 1990s, with the widespread use of long-haul jet flights and international telephone calls, credit cards started becoming increasingly popular. People finally started trusting them. The credit and debit card business became the leading driver for the entire financial industry.
Later on, we saw the increasing use of technology in finance. Not many people realize this now, but telesales were a radical innovation in the 1990s and the early 2000s. One could order a product seen on TV through a phone and a plastic card. The delivery would happen soon enough, making it a highly convenient way of purchasing products, particularly for busy individuals. As such, virtual sales quickly gained momentum all around the world, starting with the United States and Europe, soon spreading globally.
With the rise of the internet, practically everything was turned upside down. There was no need to watch TV and call numbers anymore. One has the possibility to scroll through the web pages and select the item they needed. This opened up whole new horizons not only for individuals, but also for businesses. This is how e-commerce was born. Yet, it went through a long path to become what it is today.
Stock markets were also shifted dramatically with the rapid pace of digital transformation. Trading became accessible from anywhere at all times. Platforms like MetaTrader 4 (Commonly referred to as MT4) are used by millions of users on a daily basis. When comparing MT4 to other software there is a lot of difference between all of them. This shows just how diverse the new, digital, and the more convenient world is. It gives us more opportunities and options, compared to traditional means of doing business.
All in all, fintech has completely transformed the way we live. Today, one can probably not find a commercial bank without its own web or mobile banking platform. We have gotten almost too used to using convenient, fast, and digital services. But what inventions were particularly significant for the future development of the sector? We have listed some of the key innovations within the fintech niche of all time.
Plastic cards: when it really began
Above, we have told you a story about how plastic debit and credit cards practically started the history of fintech. Without this smart invention from the 1950s, the niche of fintech we know today would probably be quite far behind. Although credit cards failed to gain momentum shortly after their invention roughly 70 years ago, they still played a key role in defining the future from the 1990s.
Just think of how big of a deal plastic cards are. They still are the most widespread means of cashless payments. Debit and credit cards are used by billions of people on a daily basis globally for small and big purchases, different kinds of payments, and transactions. Their role in today’s financial environment is simply priceless.
Taking a loan from the bank has always been a tough process, particularly for mid to low and low-income individuals and households. Traditional commercial banks ask for outstanding guarantees and have extremely big overheads and interest rates. Therefore, financial resources for different purposes have long been inaccessible for big portions of the population in practically all countries around the world.
However, fintech managed to if not end, at least minimize the issue in many nations. Peer-to-peer lending is the practice of matching lenders and borrowers on the internet. P2P lenders most commonly operate completely on the web, without any physical service centers. With this approach, they try to reduce costs of operation to the mere minimum while offering cheaper and more accessible services.
P2P innovation often is overlooked by other more tangible examples of fintech innovation. However, we should always keep in mind what the big impact of a certain process is. P2P innovation has done an amazing job making financial resources more accessible for millions of less fortunate and more socially vulnerable individuals.
This one is probably what we think of when hearing the word ‘fintech’. In the past decade, digital banking has pretty much changed everything we knew about the use of commercial bank services. Today, performing a range of activities and financial transactions is easier than ever before. All of these can be done from home, without leaving home.
The change in the banking sector has had a significant impact on people’s lives all around the world. Just like with P2P, mobile banking has also opened the door to commercial financial services to many people. Yet, this is not the end. With the introduction of neo banks and other high-tech digital institutions, mobile banking is expected to go even further.