Financial technology, or fintech, applies new technologies to improve, automate and simplify traditional financial services. This includes mobile banking, digital payments, lending platforms and investment products. It also encompasses the development and use of blockchain, which compresses financial procedures like title transfers, home sales and money transfer into a single step that can be completed in seconds instead of days. Fintechs are accelerating the financial services industry’s digitization and disrupting the business models of traditional banking service firms, according to McKinsey.

The first era of fintech started in 1967 with the installation of the world’s first ATM, followed by increased digitization of financial services during the 1980s as the NASDAQ stock exchange and global messaging system SWIFT took shape. The 1990s saw the launch of PayPal, which hinted at a greater movement towards online payment systems.

The emergence of bitcoin and other cryptocurrencies in the 2010s marked the beginning of the second era of fintech, which is being defined by its rapid growth in emerging markets. This era is being driven by regulatory change, declining consumer trust in banks, and a desire for innovation by start-ups. It is also being accelerated by technological advancements like open banking, which allows third-party fintech providers access to consumers’ financial data, and Banking as a Service (BaaS) platforms that make it easier for established banks to develop and launch neo-banks. The neo-banks are able to offer more consumer-friendly digital banking and lending services than traditional banks, at significantly lower costs.