Although FinTech has sparked a lot more interest over the recent years than before, it’s been a concept that was in fact introduced in the very late 1900s and the beginning of the 2000s when online stock trading began. Within this week’s blog post we take a closer look into how the FinTech industry has developed over time and how it has become the fast-paced sector we are familiar with today.
Growth in 2008
In the years leading up to 2008 and onwards, key advancements were made in the FinTech industry as this period saw the introduction of mobile payments as well as P2P (peer to peer) lending platforms. However, a crucial reason for some of these advancements is the global financial crash in 2008 which prompted the financial sector to have non-traditional banking options to rely on as well as the rise of smartphones which gave people the option to opt for online services. Overall, the 2008 crash was a clear catalyst for the industry as it sparked more investments to be introduced in the years following.
As the FinTech world started to become more in demand due to banking services having to adapt to the aftermath of the 2008 financial crisis which resulted in higher capital requirements and harsher lending policies. To combat this, investors had to look for alternative options to provide clients with returns, such as the establishment of digital currencies and crowdfunding. From 2015, even more technological advances were made, and this resulted in AI chatbots as well as digital banking which made it much easier for consumers to manage their finances.
Growth in 2019
The main factor in 2019 was of course covid-19 which acted as a massive catalyst for the growth of the Fintech industry as everything had to move online due to lockdown regulations. This period saw a significant rise in banking methods, largely due to AI innovations over the time, more specifically the demand for open banking, online lending as well as digital insurance and securities. These new demands have helped consumers make the most of what FinTech has to offer.
What the future holds
From looking into the humble origins of FinTech and the timeline of how far it has come in society over time, it is evident that the 2008 financial crisis as well as the global pandemic are the two major instances where the industry flourished as it was the only one that could provide instant and long-term solutions to consumer’s needs. At present, due to the increased smartphone penetration in the global majority countries, digital banking and mobile payments have become the norm, especially since younger generations want to have more control over their finances. Ultimately Fintech has had a good impact as not only is it making people more financially literate but also increasing global financial inclusivity.