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Fintech: The History and Future of Financial Technology

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Technology has always played a massive role in the financial sector, with every improvement leading to an upgrade. Fintech is a combination of two words: financial and technology.

It involves the integration of technology into financial services and offerings. This helps to improve their use and delivery to customers. It also aims to enhance and automate the use and delivery of financial services.

Fintech has existed longer than most people know and has evolved through the years. This article takes an in-depth look into the history and future of financial technology.

The history of financial technology

The history or evolution of Fintech spans three eras. Each period has significant events that changed how consumers related and interacted with money. These three periods are Fintech 1.0, 2.0, and 3.0.

Fintech: 1866 to 1967 (Fintech 1.0)

The early history of Fintech dates back to the 19th century, 1866 to be exact. So the first era in the evolution of Fintech was from 1866 to 1967, when people started talking about financial globalization.

There were investments in communications infrastructure during this period, for instance, the telegraph and transatlantic cables (1866). It empowered the transmission of financial information and data across borders.

In 1918, the Fedwire was established. It is a proprietary telecommunications system that the banks created to process funds transfers and connect all 12 Reserve Banks, Federal Reserve Board, and the US Treasury. These institutions connected via telegraph using Morse code.

The 1950s saw the emergence of credit cards which reduced the need for individuals to use cash to pay for their transactions. The first establishment to introduce credit cards was Diners Club in 1950, followed by the American Express Company in 1958.

Fintech: 1967 to 2008 (Fintech 2.0)

Fintech 2.0 started from 1967 to 2008. This period signifies the shift from analog to digital, led by traditional financial institutions. For example, in June 1967, Barclays Bank installed the first Automated Teller Machine (ATM), marking the beginning of the modern period of Fintech.

Also, this era experienced significant trends in the early 1970s. For example, NASDAQ commenced operations on the 8th of February, 1971, beginning how financial markets operate today.

In 1973, the Society for Worldwide Interbank Financial Telecommunications (SWIFT) was formed. SWIFT is behind most international money and security transfers. It is the first and most commonly used communication protocol between financial institutions worldwide.

SWIFT is an excellent network financial institutions use to accurately and securely send and receive information like money transfer instructions. The 1980s also witnessed the rise of bank mainframe computers leading to the introduction of online banking.

For example, Tradeplus introduced E-trade in 1982. In the 90s, this flourished due to the Internet and e-commerce business models. In addition, online banking led to a significant shift in how people perceived money and related to financial institutions.

When the 21st century began, banks' processes and interactions with various individuals, e.g., retail customers, had become entirely digitized. However, by 2008, a Global Financial Crisis brought the era to an end.

Fintech: 2008 till present (Fintech 3.0)

The financial crisis of 2008 soon morphed into a worldwide economic crisis, and once the public understood the problem, they began distrusting the traditional banking system. As a result, many financial experts lost their jobs, leading to a shift in mindset and a new era: Fintech 3.0.

New 'players' and already existing ones like banks and other financial institutions characterize this period. For example, in 2009, the release of Bitcoin significantly impacted the financial world. This event led to a boom in different cryptocurrencies before the great crypto crash in 2018.

However, despite the crisis, many continued to buy and trade cryptocurrencies. You can learn how to buy Bitcoin on Moonpay. Moonpay is a platform that offers a fast and straightforward way for individuals to buy and sell various cryptocurrencies.

Another prominent event that shaped Fintech was the mass-market penetration of smartphones. This enabled internet access for millions of people worldwide. Also, with smartphones, people have access to different financial services.

For example, in 2011 and 2014, Google Wallet and Apple Pay were introduced, respectively. Other business models that launched at this time are alternate credit scoring, small-ticket loans, and digital wallets. These all led to the Fintech industry we know today.

Top trends shaping the future of Fintech

There are specific trends that help analysts understand the future of Fintech. So, below are the top trends that shape the future of financial technology.

1. Mobile banking and cashless transactions

One major trend impacting the financial technology industry's future is mobile banking and cashless transactions. The COVID-19 pandemic and lockdown pushed this trend into the limelight. Although it already existed, the 'stay-at-home' order made it more compulsory for people to perform their transactions through their mobile phones.

The Fintech industry consists of a significant amount of mobile banking solutions. With this rise in customer requests for easy access to their bank accounts, almost all banks provide mobile banking services. So, in the future, Fintech companies will develop more ways for mobile banking and cashless transactions to be as flawless as possible.

2. Cryptocurrency and blockchain

Cryptocurrencies, like Bitcoin, Ethereum, Tether, etc., continue to impact the financial world. As a result, many individuals and businesses turn to crypto as their preferred payment method.

Cryptocurrency is a digital or virtual currency protected by encryption, making counterfeiting or double-spending almost impossible. Blockchain technology is valuable in Fintech, ranking high among the top trends.

The blockchain market is expected to grow astronomically in the coming years because blockchain-verified data is highly secure. So, if you are looking to launch a Fintech company, apply blockchain technology, and your product will stand out in speed, efficacy, and security.

These characteristics make it easy for your customers to exchange digital information better. Also, blockchain technology and cryptocurrency are required to develop applications that will advance Fintech.

3. Adoption of API

API stands for Application Programming Interface. It is a set of programming codes that allows data transmission between one software and another. For example, Fintech APIs enable data access among the parties involved in financial transactions.

These include banks, third-party providers, consumers, and websites. The increasing adoption and use of Fintech APIs in the financial sector led to a vast creation of new applications, services, and business models.

The benefits of using Fintech APIs include faster solution development, accelerated time to market, reduced development costs, more time and resources to focus on innovation, and many others.

4. Artificial Intelligence

Artificial Intelligence or AI is the ability of a computer or a robot controlled by a computer to do tasks typically done by human beings. Fintech companies use AI to analyze and manage data from various sources.

The information provides valuable insights that they will, in turn, use in their business. For instance, with these data, banks can overcome the daily challenges they face when providing services like loan management.

Other benefits of AI to Fintech companies include:

  • Improved security by providing services such as fingerprint or facial recognition
  • Improved customer service through chatbots
  • Helps with User Behavior Analysis
  • Fraud detection
  • AI-powered personalized banking apps

Top Fintech companies in 2022

Many Fintech companies offer products or services covering payment processing, online and mobile banking, financial software, etc. Below are some of the top Fintech firms in 2022.

1. Square

Square is a financial technology company that provides businesses with flexible solutions. With Square, you can sell in-person, online, or anywhere you like. Also, it ensures payments are secure, whether they are from your customers or clients.

Square provides tools for connecting every aspect of your business, improving engagement and repeat sales. Also, the tool lets you easily manage your team with solutions like scheduling, timecards, and full-service payroll.

2. PayPal

PayPal is the faster, more straightforward, safer way to perform transactions online. It is perfect for individuals and businesses. PayPal helps connect buyers and sellers on a secure platform.

With PayPal, you can shop with peace of mind. The platform doesn't share your complete financial information with sellers. As a result, it's easy to carry out transactions.

Finally, PayPal is perfect for small to medium businesses. It provides everything your company needs to sell virtually, such as online checkout and POS hardware.

3. Stripe

Stripe is one of the best Fintech companies that offers payment solutions for the Internet. Millions of businesses, regardless of the size, use Stripe's software and APIs to accept payments, send payouts, and manage transactions.

Stripe provides all you need to build websites and apps that accept payments and send payouts no matter your location. The products from this tool are great for online and in-person retailers, subscription businesses, software platforms, etc.

Lastly, with Stripe, you can beat fraud, issue virtual and physical cards, get financing, send invoices, etc.


Fintech has come a long way since its inception in 1866 and continues to make waves. This article has addressed the history of Fintech while also looking ahead to the future of this industry. Finally, investing in Fintech companies like Square has rewarding benefits.

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