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Fintech Can Be Viewed in Three Distinct Time Periods:: 1-Precursors To The Digital Age of Financial Services (1866-1967)

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Do you often picture a utopian scenario of hassle-free daily life?

Envision everything at your


doorstep, ready to go at a click-allowing you to be unencumbered and stress-free? I know I
would love it! Well, maybe not everything can happen that way but banking and financial
services can. FinTech has ease the lives of people. It has touched not only millionaires but also
the millennials. FinTech has efficiently brought ease in the working ecosystems.

Tech is changing the way the world works including the financial world. In recent years, how
people and businesses manage and receive money has changed considerably. FinTech is in large
part behind the massive shift in the industry. Apps, websites and even new form of currency have
all disrupted the financial field.

Now let’s talk about what exactly FinTech is.

FinTech is a portmanteau of the terms “finance” and “technology” and refers to the innovative
use of technology in the design and delivery of financial services and products.

To better understand where FinTech is headed, it is imperative to know where it all started from.

The confluence of finance and technology has a long-intertwined history spanning more than 150
years. Development in finance and technology have been mutually reinforcing. The history of
FinTech can be viewed in three distinct time periods:

1- Precursors to the digital age of financial services (1866-1967)

The introduction of ‘telegraph’ in 1838 and laying of the first transatlantic cable in 1866
provided the fundamental infrastructure necessary for the digital age of financial services. This
time period culminated with the introduction of credit cards in 1950, the first handheld financial
calculator and the deployment of the first ATM in 1967.

2- Digital age of financial services (1967-2008)

This time period saw the establishment of automated clearing houses in united states and United
Kingdom between 1968-1970. In 1982, a company named TradePlus kick-started the online
brokerage investment revolution and quickly started driving down the cost of online trading. The
mainstream emergence of the internet greatly affected financial services. Wells Fargo became
the first bank to offer an online checking account in 1995. By the end of this time period, a
majority of banks internal processes, interactions with outsiders and an ever-increasing number
of their interactions with retail customers had become fully digitized.

3- New age financial services (2008-present)

The financial crisis of 2008 can be viewed as the turning point for FinTech. Three factors,
distrust of banks in the minds of the general public, large pools of highly qualified financial
professionals out of jobs and regulatory factors, resulted in the creation of the perfect incubator
to allow the FinTech industry to bloom into a hyper-growth market.
Whilst there is a lot of economic and personal pain being caused by the current pandemic, with
months of quarantine ahead, with both companies and households in survival mode, there will
eventually be an end to the crisis. History has shown this with previous such crisis over more
than a century.

The FinTech sector is one of the areas to benefit from the current crisis. The rapidly increasing
online activity and digital services, as a result, will accelerate what was already trending. This
includes well for FinTech app development companies that have genuine differentiators and
readiness of services in the digital market in the infrastructure, cashless payments, and Robo-
advisory space.

Whenever mankind has entered into new horizon, it has faced some challenges. Fintech is no
exception to it. The challenges include:

1- Cyber-Security

Fending off cyber-attacks is one of the greatest challenges faced by businesses around the world,
and given the sensitive nature of the client data they hold, they’re serious concern for FinTech
firms. So, the question is what can you do to minimize your exposure to cyber-attacks and keep
client data safe while keeping ever spiraling costs down?

Well, with traditional cyber security methods becoming unsustainable, you may need to reassess
your approach to protecting yourself and your clients from cyber criminals.

To this end it may be time to consider deploying dynamic security solutions such as a ‘moving
Target Defence’(MTD). This method helps to frustrate attacks by continually shifting the points
of attack and robbing hackers of the static targets they’re familiar with breaching. MTD has been
already developed by the US Department of homeland security as well as major European banks.

2- Retaining the human touch

One key area in which FinTech firms can fall behind traditional financial companies is through
the absence pf the ‘human touch’, with their operating models often leaving clients to feel like
they are dealing with some faceless entity.

The lack of a ‘human touch’ can have disastrous consequences if your company relies too much
on technology- just look at TCB’s IT meltdown and how it left thousands of customers without
access to their accounts.

But what steps can Fintech companies take in order to avoid becoming the soulless financial
institutions they set out to beat?

Being able to pick up the phone and speak to a real person is an essential selling point for some
consumers, So FinTech firms should be prepared to cater for this.
Cost consideration really do come into play here, and for many businesses offering customers a
personal service isn’t always practical. But ensuring that you offer at least some level of direct
engagement and that you have a dedicated team to support customers when something goes
wrong helps lead to a more seamless customer journey. While the road ahead will not always be
easy when it comes to FinTech, forward planning and constant research can help companies to
overcome the obstacles!

The technology and innovation that is driving the growth of the FinTech industry are not limited
to any one genre. An assemblage of various technologies including AI, cryptocurrency and
blockchain contributes a huge stage to its transformation into a futuristic world. Let’s explore
how AI, cryptocurrency and blockchain based FinTech solutions are becoming key to the future
of the modernized BFSI sector.

AI enabled chatbots advice and sometimes coach their clients on improving their respective
transactions and several other forms of trading and commerce. They also enable profiling their
customers along with categorizing them. Categorizing, here, is done on the basis of all the factors
they have access to, along with their risk profit as well. Such tools when implemented properly
help gather evidence and provide financial organizations with the necessary data that would
allow them to identify fraudulent behavior or transactions. With its continuous advancements,
the AI tools are improving on a daily basis while providing more engaging features for FinTech
industry.

The blockchain system dealing in cryptocurrency are one of those futuristic trends that will
surely take the FinTech industry by a boom. Technology possesses the power to transform the
way people transact business or manage their assets. According to experts, blockchain and
cryptocurrency is such a powerful tool that can sincerely help improve business conducting fair
trade and democratize the global economy. It is believed that these two technologies will portray
themselves as significant mainstays for the future of FinTech.

“FINTECH IS NOT ONLY AN ENABLER

BUT THE DRIVING ENGINE”.

-PIERRE GRAMEGNA

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