FinTech Courses Online

The bitcoins you recently bought on Coinbase? FinTech. The online banking services you access via your smartphone? It’s FinTech in action. The PayPal payment you made for the new laptop you ordered online? Again, FinTech. The robo-advisors you turn to for financial planning advice? That’s FinTech too.

FinTech deploys easy-to-use technology to make financial services simpler and accessible to everyone. It removes the reliance on traditional banking systems and the need to set foot in brick-and-mortar financial institutions. From mobile banking and online payment platforms allowing users to make instant financial transactions to crypto and stock trading, there is virtually nothing FinTech cannot do.

FinTech empowers both businesses and consumers to take charge of their finances. It enhances financial literacy, breaking down silos and improving financial outcomes with the help of advanced technology. Although FinTech has been around for decades, it is only in the last few years that FinTech companies have transformed how people engage with financial services.

Let’s dive deep into FinTech and understand what it means.

FinTech, a portmanteau of the words “Financial” and “Technology,” describes any new or emerging technology aimed at automating and improving the delivery of financial services. It typically leverages advanced software and algorithms to help financial institutions deliver financial services faster and more innovatively than previously possible.

Here’s a good example to explain the impact of FinTech. Imagine having to pay for all your online purchases with cash. Physical transactions are inconvenient regardless of where you are or if you have money. Now, think of internet banking or a mobile payment app like PayPal. These services let you pay for online purchases instantly and in real-time. That’s FinTech for you.

In general terms, FinTech describes the use of the internet, software technology or cloud services to connect with or use financial services on computer and mobile devices. Although the term’s original use was restricted to the technology financial institutions used in their back-end systems, FinTech’s modern implications focus on customer-oriented services. From an investor’s ability to see the stock performance in real-time and mobile banking apps to tools financial institutions use to make critical business decisions, all are part of the FinTech revolution.

The origin of FinTech goes back to the 19th century. Revisiting FinTech history makes it easier to understand and appreciate where this financial innovation is headed in the future.

Let’s break up the FinTech timeline beginning with the mid-1800s.

The 1860s

Giovanni Caselli developed the pantelegraph, an early form of the modern-day fax machine. Banks mostly used the device to verify signatures through transmissions over telegraph lines. While it was one of the earliest known applications of FinTech, the pantelegraph was slow and took about 108 seconds for a 25 words sheet of paper to transmit.
1880

A couple of years after the introduction of the pantelegraph, merchants and consumers in the United States started using charge coins and plates to exchange goods and services for credit. Charge coins and plates were metallic tokens displaying details like the customer’s name, address, identification number, the cardholder’s signature and the issuer’s name. While charge coins later became obsolete, charge plates were replaced by modern credit cards.

1918-1919

In the first instance of digitalisation of money, the United States Federal Reserve Bank developed a system for the electronic transfer of funds. Then known as Federal Reserve Wire, the Morse code-based system is now known as Fedwire Funds Service. It is a real-time gross settlement (RTGS) funds transfer system in the USA. In 1919, economist John M. Keynes published his book ‘The Economic Consequences of Peace,’ considered the first literature linking finance and technology.
1950-1958

As a precursor to the modern credit card, Diner’s Club Inc. invented the first universal credit card to facilitate dining on credit at multiple establishments throughout the US. It was a big deal then, and only 200 members had access to the exclusive privilege. The membership grew to 42,000 within two years of the Diner’s Club card introduction. Its popularity nudged the introduction of the American Express Company credit card in 1958, making American Express the largest payment network globally.

1960-1967

The 1960s witnessed some significant advancements in FinTech. In 1960, Quotron, a Los Angeles-based company, did away with the use of printed ticker tapes and started offering money managers and brokers stock market quotes on electronic screens. It enabled brokers to get the latest prices for securities and traded investments.

In 1966, the telex network was introduced as a replacement for the telegraph to make financial communication easier. However, the next phase of the FinTech revolution began with a North London branch of Barclay’s Bank installing the first automated teller machine (ATM).

1971-1973

One of the most prominent FinTech milestones was conquered in 1971 with the establishment of the US National Association of Securities Dealers Automated Quotations or the NASDAQ. As the world’s first electronic stock market, NASDAQ transformed the bidding process and helped modernise the IPO process. The establishment of NASDAQ was followed by the launch of SWIFT in 1973 to facilitate financial transactions and payments service between worldwide banks.

1982-1983

The 1980s were marked by two significant FinTech milestones: e-trading (electronic trading) and online banking. In 1982, E-Trade Financial Corporation (originally TradePlus) became the first online brokerage company. Morgan Stanley acquired the firm in 2020.

Another significant leap in the FinTech evolution came in 1983, with the Bank of Scotland providing its Nottingham Building Society customers with online banking access. In the same year, the Chemical Bank in the US introduced online banking, but the idea was shelved in 1989 due to lack of reach. By the late 1990s, most American banks had set up their internet banking websites after the staggering success of online banking in the United Kingdom.

2009-2017

The year 2009 ushered in the crypto rage, introducing people to an entirely new concept of currency trading with the release of Bitcoin. In 2011, Google developed and released Google Pay Send (formerly known as Google Wallet), allowing smartphone users to make instant payments through their phones.

From 2014 onwards, India, China and Africa began emerging as potential players in the FinTech sector. The development of financial software by Indian IT firms, payment banks in India, Alipay in China and M-Pesa in Africa were key SaaS developments. Come 2017, Alibaba introduced the quirky yet innovative concept of “smile to pay” facial recognition payments across KFC outlets in China. All users had to do was smile at a 3D camera to pay for their food.

2020 and beyond

FinTech today marks a major shift from the western domination of the financial world to global digital banking advancements. Technological innovations in the form of Big Data, artificial intelligence (AI), robotic process automation (RPA) and the like have and continue to transform the banking, financial services and insurance (BFSI) sector. While they make the future of FinTech look bright, the industry has its share of challenges.

Although it may be difficult to accurately predict the future of financial technology in the light of the pandemic, FinTech advancements so far are proof of the readiness of the financial industry to evolve and adapt with time.

FinTech has given us the luxury of access to financial services from the comfort of our homes or wherever we are. Want to send money to your friend? All you need to do is fire up an online payment app on your smartphone. Want to know your bank balance? Log in to your online banking account and pull up real-time information without visiting the bank physically.

However, the convenience FinTech offers us today is the result of decades of evolution and advancement on the technological front.

The financial sector has been using technology since way before FinTech (as we know it today) existed or even before the internet was born. So, what was financial technology like in the earlier days

The earliest applications of technology by trading firms and banks were the use of physical media like paper and coins containing information about the customer and the issuer. However, transferring these documents required physical modes of transportation, restricting the scope of technology use to specific locations.

The development of the telegraph system in the mid-19th century made it possible to separate information from its physical form and transmit it over longer distances. These analogue technologies revolutionised long-distance communication. As financial technology, these lasted up to the mid-20th century. Henceforth, innovations in various forms of digital technology led to the inception of information and communication technology in the banking and trading sectors. However, the widespread use of cryptocurrency from 2009 onwards set the seal on the modern concept of FinTech.