Fintech Origins

Fintech first began in 1950, when the first credit card was born to “Diners Club” in Pennsylvania. Customers could charge their general restaurant bills on a paper card–ingenious. This concept continued to take fire and lead to the creation of American Express in 1958, which issued 1 million cards within the first 5 years. Skip to 1969 and imagine how astonishing it was to see the first ATM near the local bank. The sensation to deposit checks and withdraw cash using a machine must have been exhilarating.

This isn’t the fintech we know today.

Today VB Profiles counts 1329 fintech companies in 35 different categories ranging from investments, to online banking, and all the way to cryptocurrencies. According to EY’s Fintech Adoption Index, fintech adopters have increased to 84 percent, with a 22 percent average increase in the last year. Also, 64 percent of fintech prefer using digital channels to manage most aspects of their life, compared to 38 percent of non-fintech users.

Let’s not even start on how much money is going into the industry–$17.4 billion last year alone. Where the world was amazed to see banks issue cards and machines that could “hold money,” now it’s shocked to see softwares striving to replace physical banks, cold hard cash, and plastic credit cards altogether.


How do you define fintech today?

Here’s the Google definition: “computer programs and other technology used to support or enable banking and financial services.”

Pretty self explanatory.

A little longer definition from Investopedia: “Fintech is a portmanteau of financial technology that describes an emerging financial services sector in the 21st century. Originally, the term applied to technology applied to the back-end of established consumer and trade financial institutions. Since the end of the first decade of the 21st century, the term has expanded to include any technological innovation in the financial sector, including innovations in financial literacy and education, retail banking, investment and even crypto-currencies like bitcoin.”

The 21st century brought on a whole new version of fintech. Instead of credit cards and ATMs, it’s all about virtual cards and virtual money. Startups and millenials are the main culprits of this fintech evolution, producing online platforms with tools to handle an entire company’s expenses. These online tools can do a lot more than hold and transfer money; they provide some of the following:

  • Streamlined HR/payroll processes
  • Subscription management using virtual cards
  • Automated expense reports and reimbursements
  • Heightened visibility into transactions and company spending
  • Streamlined accounts payable processes
  • Automate travel booking and expenses

As for Bitcoin, many users don’t consider the whole cryptocurrency realm under the fintech umbrella since it hasn’t been validated across the industry. You can find plenty of complaints about it, including a recent article on Forbes are calling the whole thing an “unregulated financial vehicle.”The blockchain industry is battling this opposition by starting “Regtech,” regulatory technologies to help deal with compliance issues. Regtech especially focuses on preventing fraud and money laundering. One way they wish to do this is by changing the Anti-Money Laundering rules into a digital, more secure format. Think of it as a grammar checker for Word, but a fraud-checker for cryptocurrency.


Where is fintech going?

Putting aside the cryptocurrency mess, fintech gurus and startups are searching every nook and cranny in the financial industry to “disrupt” (never heard that word before…🙄) the system and recreate a more productive process using technology. With the rise of fintech, the banking industry is starting to get worried; but that worry should depend on how fast they are at going digital.

According to a Yale Insights review on the rise of the fintech industry, “Compared to the transformation of other sectors, financial services have been slow to take full advantage of technology. PwC estimates that by 2020, 28 percent of traditional banking and payments business will go to fintech.”

In 2015, JPMorgan Chase CEO Jamie Dimon told shareholders that “Silicon Valley is coming” with “hundreds of startups,” looking to takeover banks with its new financial technology software. Banks are putting up barricades by shifting their tools online, making their services available to anyone who doesn’t want to drive to a bank and speak with a real person.

While fintech software companies are dealing with billions in investments and cash flow, banks are still the saddle under the nation’s funds, dealing with trillions of dollars annually. People need to keep their money somewhere, and fintech is still too new for everyone to jump on board with all of their finances.

As for the future, Accenture says we should keep three things in mind: openness, collaboration, and investment.

  1. Openness: Fintech is not a bad thing, and organizations should be open to the new innovations and technologies fintech has to offer. Startups usually start based on a problem. Let fintech solve your problems.
  2. Collaboration: If banks don’t want to get left behind in the gutter, they have no other choice but to team up and partner with the fintech industry–either adapt, or die.
  3. Investment: Good thing there are fintech softwares that make it easy to invest, because with $17.4 billion in investments last year, the future opportunities to invest in fintech will only increase.


Whether you’re interested in fintech or not, the concept will come knocking at your door sooner or later. I’m sure people were skeptical of credit cards and ATMs back in the late 1900s, and so might you be when it comes to digitizing your company’s finances. However, just like you’re starting to trust a self-driving car (thank you Elon), start trusting the expense management solutions out there to make your life easy and save you up to thousands of dollars each month.

About Divvy

Divvy is a secure financial platform for businesses to manage payments and subscriptions, build strategic budgets, and eliminate expense reports. By integrating real-time tracking for every transaction, Divvy provides organizations with instant insight into their spend. With Divvy, you can make informed cash flow decisions, curb losses before they happen, and never have to save a receipt again.

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