Fintech Secrets: Fintech Era

Welcome to the Fintech Secrets Series, where we go on a journey through one of the most transformative sectors of our time financial technology (Fintech). You can read the introduction from here.

I always believe that before embarking on any new topic, it's essential to explore its history, when it originated, how it developed, and the reasons behind its emergence. This approach provides us with a clear understanding of what existed before, the motivations for the solution at hand, and the problems it addressed. By doing so, we gain a comprehensive view of the topic and its significance.

Even when discussing programming languages with peers or learning them independently, I take some time to study their history, when they were created, how the idea emerged in the founder's mind, and the steps taken to develop them. Understanding history can also inspire you to innovate solutions for existing problems or reimagine those that have evolved over time.

The history of Fintech (financial technology) spans several centuries, evolving in tandem with technological advancements and changes in financial systems. In this article, we will explore its journey from its early beginnings to the modern era. Some sources discuss the history of Fintech dating back to the 19th century and even earlier. However, a perspective I find more neutral and logical is to trace the timeline starting from 2008, dividing the journey of Fintech into two phases: before 2008 and after 2008.

Why 2008?
The year 2008 is significant due to the financial crisis, which is considered a turning point for financial technology. The collapse of major financial institutions led to a loss of trust in traditional banks, creating an opportunity for new players to emerge.

Startups in the Fintech space began offering services that were traditionally within the domain of banks, but with greater efficiency and lower costs. Companies like PayPal, which had been around since 1998 (before 2008), gained increased attention, while new platforms for peer-to-peer lending and crowdfunding began to surface.

Furthermore, the growing prevalence of smartphones and the internet sparked another revolution in Fintech: mobile payments. This development created a vibrant new market, one of the most prominent today, facilitating user transactions through a variety of systems and providing merchants with a secure and innovative way to process payments easily and accurately.

After 2009, digital currencies, most notably Bitcoin, began to emerge. By 2014, cryptocurrencies had become a global trend, prompting Fintech companies to explore blockchain technology beyond digital currencies. Companies started experimenting with distributed ledger technologies for various applications, ranging from payments to smart contracts. This association between Fintech and blockchain, along with the rising popularity of digital currencies, played a significant role in the field's growth, and for a considerable period, Fintech remained closely linked to the discussion of cryptocurrencies.
This led to the emergence of a new concept in the field known as RegTech (Regulatory Technology).

Regulatory Technology (RegTech): As more companies entered the Fintech space, the need for regulatory compliance became increasingly important. This led to the rise of RegTech solutions, which automated compliance and monitoring processes, making it easier for Fintech companies to meet regulatory requirements efficiently.

In 2017, banks began allowing Fintech service providers access to their banking databases, creating new opportunities to offer more personalized and integrated financial solutions. This development facilitated asset trading and direct investment without intermediaries, posing a challenge to the traditional banking system. Thus, the paths of banks and Fintech intersected once again, complementing each other.

AI and Machine Learning also played a significant role in driving innovation, from chatbots and customer service to risk assessment and fraud detection. Fintech companies began leveraging data to deliver smarter, more personalized financial products.

This is the second article in the Fintech Secrets Series, and we have not yet delved into solutions or topics directly related to programming. Starting from the next article, we will begin discussing technical aspects and programming-related topics. However, this introduction was essential as it primarily covers the underlying motivations behind the emergence of the fintech business as a whole.