FinTech in the 1950s?

In the minds of many of us the FinTech sector is a relatively new phenomenon that has grown over the past decade or so. However, following the trail of banking innovations back to the 1950s paints a different picture of FinTech and their supposed threat to the big banks.

A recent article in Forbes argues that FinTech is not nearly as new a concept as we assume. They first point to the birth of credit cards in the 50s which brought efficiency and convenience — two staples of FinTech culture. In the decades that followed the industry would be introduced to ATMs, electronic stock trading, and computers being used to store massive amounts of stock and transaction data. Then with the growth of the internet remote banking became a reality and individuals were given the power to buy and sell stocks online without the needing a broker.

One interesting point Forbes makes about this 65-year evolution is that none of these developments harmed banks. In fact they note that the number of bank branches in the U.S. has grown from 18,000 in 1950 to 82,000 in 2014. However in all of these cases the technology not only became mainstream but was embraced and utilized by the banks.

Perhaps that’s where the disconnect between the 21st-century FinTech and that of yesteryear begins. Today’s technologies improve upon banking functions such as lending but leave the banks themselves out of the equation (for the most part). So is it reasonable to think that these new innovations could topple the banking industry?

At this point it still seems unlikely that FinTech will overtake traditional banks. As we’ve indicated before, a more reasonable scenario would find the banks forming more partnerships with FinTech firms. After all many start-ups still require banks to be a central player in their service offerings, including mobile payment companies as well as savings and investment apps. When you think about it even those using peer to peer lenders, such as Lending Club, to get a loan still require a traditional bank to deposit the money in.

When put in a greater perspective that expands beyond the past 10 years, it seems to make more sense that the current crop of FinTech companies would find their place among the big banks in time. While technology is moving at a more rapid pace in this century than in the last, it’s important to remember that innovation itself is nothing new. With that in mind perhaps FinTech did start way back in 1950 but it’s only getting stronger as each year goes by.


Jonathan Dyer

I'm a small town guy living in Los Angeles looking to make solid financial decisions. I write for a number of finance websites, including HuffingtonPost and Business2Community. I founded in 2015 to focus on personal finance and the emerging FinTech markets.

Other Articles by Jonathan Dyer

Amex Launches Digital B2B Payments Platform Business Link

For consumers, these days, there's no shortage of peer-to-peer apps they can use to move money, with some popular examples including Cash App, Venmo, and Zelle. As for businesses, the list of options for sending money to vendors may be more limited. Now, a well-known credit card company and small business supporter is introducing a new platform for this purpose. This week, American Express announced the launch of Amex Business...

Carbon Credit API Cloverly Joins Visa's FinTech Partner Connect 

Last year, Visa introduced the FinTech Partner Connect program to the United States, with the goal of introducing institutions to vetted startups that could help them expand their product offerings. Now, the latest company to join the program is Cloverly. Founded in 2019, Cloverly is an API for carbon credits, allowing businesses and consumers to help fight climate change. As the company points out, with the Visa partnership, Visa clients...

Prosper Announces $75 Million Growth Capital Financing

A long-admired FinTech has added some new capital to its coffers and it continues to grow after more than 15 years in business. Recently, Prosper Marketplace announced that it had closed a $75 million debt financing round. This capital came from a fund managed by Neuberger Bergman and will be used to help Prosper meet the demand for its loans, credit card, investment products, and more. According to the company,...