The Fintech History Book Vol. 1 – The dawn of fintech




Can you imagine a world without fintech? No, of course you can’t. The days before millennials began smugly wielding luminescent orange debit cards, like a peacock fanning out its bight plumage, are resigned to a period some historians are calling ‘the past’. 

‘The past’ was a godforsaken time before cryptocurrency, online banking, machine learning or credit cards. 

It’s difficult to imagine, I know. Too alien for the millennial mind to really comprehend, it would be unreasonable to expect a reader to invest in reading about any period before fintech. 

It is ever as L. P. Hartley wrote, “the past is a foreign country; they do things differently there.” 

However, to understand where fintech came from, we must dip our toes into the murky waters of ‘the past’. Don’t panic. We won’t be submerging ourselves among the flotsam and jetsam of yesteryear. The fintech history book begins at the moment in time ‘the past’ begins to transform into ‘the future’. 

‘The past’ ends in 1865. In its place comes a period some historians are calling ‘the beginning of the future’. Italian inventor, Giovanni Caselli develops the pantelegraph. With it, ushered in is the first age of financial innovation. 

The pantelegraph was used predominantly to verify signatures in banking transactions by sending and receiving messages on telegraph cables. Not a particularly fast machine, the pantelegraph would take 108 seconds to transmit 25 words. Financial messaging has changed somewhat since. Despite that, the pantelegraph is the first fintech. Fintech ground zero. 

By 1867, the first trans-Atlantic telegraph cable was laid under the sea, connecting Western Europe to North America. It enabled instant communication between the financial hubs of London and New York. 1867 was also the year Lacrosse was introduced to Britain from Canada – although most historians these days believe the likelihood of these two events being connected is slim. 

Fast forward 51 years to 1918, to a period some historians are now calling ‘the end of the First World War.’ An event of vastly more importance during that year, however, was the creation of the first means to move funds electronically. The Federal Reserve Wire Network, saucily shortened to the portmanteau Fedwire, connected the United States’ 12 reserve banks using a Morse-code based system. 

The system was in use until the 1970s, when the fintech powers that be decided that Morse-code had become decidedly unfashionable, and that the Teleprinter exchange was far more chic. And, probably, more secure. 

Alas, the next few years were marred with unfortunate circumstances, stilling the onward drive of fintech. In 1929, the Great Depression was a rather large inhibitor to the progress of financial innovation. In the early forties, the world endured a period some historians have called ‘The Second World War’. Attentions during this period were on matters other than the development of financial technology. 

But, roll in the 1950s, and things begin to take more of a fintech shape. The 1950s welcomed the age of skiffle bands, rock n roll and, crucially, the first credit card. Released by Diners Club, plastic became the way the cool kids paid. Three quarters of a century later, and society has moved on somewhat. Everyone and their mums is packing plastic these days. Much like the music of Jerry Lee Lewis, credit cards have lost their cool in the 21st century. 

Fast forward a decade to the 1960s – an era of psychedelic music, free love and, most importantly, the introduction of the first ATM. In 1967, Barclays brought us the first automated teller machine. 1967 was also the year that Celtic Football Club became the first British team to win the European Cup – although most historians these days believe it’s unlikely the two events are connected. 

The ATM called a ‘robot-cashier’ to distribute your funds, and years from now some historians may point to this moment as the catalyst for the impending robot takeover. Regardless, 1967 was a sure step towards the fintech vision of the future.

After 100 years of financial innovation, we find ourselves in the swinging sixties, surrounded by The Beatles, credit cards and Robot Cashiers all getting on like a house on fire. But, the winds were heavy with change. The next 50 years sees us move further towards the age of the apex of fintech and the luminescent orange debit card wielding millennial. Keep your eyes peeled for the Fintech History Book Vol. 2 to get your next fix of fintech history.

 

Register for FinTech Connect on 3–4 December at ExCeL, London.

View the FinTech Connect 2019 website to find out more

RECOMMENDED