Tapping Into The FinTech Innovation

May 27, 2022October 22, 2022

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Fintech is one of the fastest-growing sectors for startups and within tech. As bitcoin and blockchain technology continue to get more popular, and millions pile into crypto, it seems like an opportune time to dive into the history of fintech innovation and where it’s going. After all, some of the best startup investors and entrepreneurs of the 21st century got their start in the fintech sector.

Fintech Innovation 1.0

While there were major developments between the 1860s through 1980s (that we’re dubbing Fintech 1.0) thanks to innovations by the Pantelegraph, Amex, and Barclays, for the sake of brevity, we’re going to skip ahead to the 1970s and start with a familiar face that is the Nasdaq.

One of the most important fintech developments of all time was the setup of NASDAQ in 1971 as the first Electronic stock market. It was shortly followed by the introduction of SWIFT in 1973, a revolutionary international payments system used throughout the world to this day. You may have heard of Russia being recently kicked out of SWIFT by the USA and EU as part of sanctions against the invasion of Ukraine.

Fintech Innovation 2.0

The 80’s saw the development of electronic trades and online banking systems. Tradeplus (E-trade) introduced the E-trade for the first time in 1982 for its customers, and more importantly these baby commercials in 2008. Another major breakthrough was the evolution of E-commerce during the mid 90’s. As adoption of the internet became mainstream via the dot com boom, people got accustomed to buying things online.

1998 saw the launch of Confinity, which later became PAYPAL, founded by venture capitalist Peter Thiel, Max Levchin, and Luke Nosek prior to Elon Musk joining via a merger in 2000. Paypal became the pioneer of cashless payments in years to come, which helped bridge the gap for merchants who did not have the necessary hardware to accept credit cards.

Fintech Innovation 3.0

The most recent stage of fintech was the development of Bitcoin in 2009, and then the creation of P2P payment systems and other cryptocurrencies in 2011.

Since then hundreds of new projects and unicorns have launched- BaaS, RegTech, Digital Lending, InsurTech, Wallets and many more segments are seeing growth and innovations on a daily basis. Companies like Square (Block) and Venmo (owned by Paypal) are the leaders in the USA, integrating crypto transactions with digital wallets, while M-Pesa in Africa, Payment banks in India, and Allpay in China are showing that the fintech sector is hot no matter where you go around the globe.

Even central banks are looking at digital currencies as a possibility to achieve their goals, with China launching the digital Yuan this year. The global market for fintech was valued at around $7.3 trillion in 2020, and is projected to grow at a compound annual growth rate (CAGR) of 26.87% through 2026 according to Research and Markets.

Fintech Innovation Now

Today’s markets are still obsessed with the financial attributes of Bitcoin but the programmable blockchain networks of the future, like Ethereum, are re-inventing data standards to create a more efficient finance development ecosystem. Web 3.0 and the Metaverse will lead to new fintech and ecommerce possibilities, so it looks like the fintech revolution is just getting started.