A Historical Perspective on Disruptive Technologies

This chapter provides a contextual background to understanding the contemporary FinTech revolution through the exploration of the history of disruptive technologies. Even at a very early stage (late 1860s–1960s) technology and finance had a strong relationship. Ever since, technology has contributed to the development and advancement of banking and financial solutions: two examples being the introduction of credit cards and ATMs. Later on (1960s–2008) the relationship between technology and finance became increasingly strong and intertwined—heavily impacting financial products and processes, and gradually digitalising the payment system, banking channels and securities markets. Beginning in 2008, and lasting up to 2020, the FinTech and digital economy revolution spurred many new disruptive innovations, such as cryptocurrencies, peer-to-peer marketplaces and robo-advisory services. Furthermore, the unprecedented effect of technological innovation in financial markets had an impact on the competitive environment, due to the entry of new (often unregulated) providers with innovative business models. These novelties ultimately affect the sustainability of the traditional business models of financial intermediaries and raise policy concerns related to financial stability and consumer protection. The chapter concludes by discussing the future developments suggested by recent trends in technological innovation, regulatory and supervisory approaches and the need to grasp the benefits of digitalisation by the financial sector.