The History Of FinTech

The finance industry is concerned that their mutually beneficial partnership with tech has come to an end; ‘Big Tech’ refers to the companies holding all the cards and banks are starting to fall behind.

0
The history of fintech
The history of fintech

The relationship between tech and finance has historically been substantially productive and mutually beneficial; Consider the invention of credit cards or ATMs that allowed banks to cut back on the labour costs of tellers. However, this has established the FinTech infrastructure; a traversing concept in which one threatens to intersect and undermine the other.

It was in 1971 that the first electronic stock market opened its doors, so to speak. The innovative machinery was the starting point of trading as we know it today, as well as the advent of the tech industry’s burgeoning relationship with finance. The invention introduced sophisticated security systems that reduced the cost of trading and improved the accessibility to the stock market. However, it was only a few years later that the SEC scrapped fixed rate commissions, opening up the stock market to even more people at a reduced cost.

However, it wasn’t until 1987 that electronic trading was conceived; it even took until 1992 for Globex to be launched entirely, known as the start of the “big bang” of trading founded in London. Since then, finance has adopted the information that technology provides, including exploiting advantageous opportunities. Access to this technology and information has become imperative to strategic financial institutions, as they experience more pressure to be competitive.

Live trading has since become favoured by the majority of traders across the world; its immediacy permitted traders to become more reactive and agile in the markets they invest in. This revolution has changed and improved the accessibility of the finance industry yet again as you don’t need to be a pro or high-flying broker to invest.

The state of the industry has evolved even further since digitised wallets and mobile applications have increased the opportunity for equity funding via crowdfunding platforms, saving apps have direct access to bank accounts nicknamed ‘robo-advisors’  and payment apps. These are considered a consumer-facing aspect of the FinTech services as opposed to the more traditional ‘trading’ and institutional sector of FinTech. Live trading, too, has become more accessible with the advent and continual growth of mobile technology.

FINTECH Investment Financial Internet Technology man hand on table Business, coffee, Split tone
FINTECH Investment Financial Internet Technology man hand on table Business, coffee, Split tone (Photo Credit: www.shutterstock.com)

The consumer-facing services are where technology companies are beginning to encroach into banking institution territory. These well financed, household corporations such as Apple and Amazon, have already generated their customer information. They are able to track consumer trends with no additional cost to the company; they are, essentially, becoming a bank and a tech firm.

The finance industry is concerned that their mutually beneficial partnership with tech has come to an end; ‘Big Tech’ refers to the companies holding all the cards and banks are starting to fall behind. Moving forward, technology companies have an upper hand in regards to new technology, including artificial intelligence and voice recognition. Google anticipates that by 2020, 50% of all searches will be conducted by voice search. This illustrates the potential opportunity that new technologies can harness, whereby those utilising these advances will have better access to the consumer data it yields.

Finally, the biggest anxiety of the banking industry as we move further and further away from historic tellers and brick-and-mortar stock exchange, is that tech companies are not being held to the same scrutiny as banks. Recently, financers have been calling for household-name companies to be reviewed and answer to the same authorities if they are to operate in the same markets.

However, banks do have the opportunity to even the playing field as tech and science industries increasingly utilise the benefits of open-sharing their findings, codes and information. Information sharing is considered to be the best route for progression, working out long term issues and bugs but whether banks are likely to take this opportunity with both hands could be a matter of watching the markets.

 

Advertisements

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.