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How the FinTech Revolution Changed FOREX

Financial technology has revolutionised and powered globalisation. It is the driving factor of world-wide success and has provided everyone with the ability to benefit from financial investments and FOREX trading. 

The Development of Fintech

FinTech has experienced three main eras since its emergence as an industry in 1866

FinTech 1.0 (1866 – 1967)

  • Globalisation begins with the first transatlantic cable in 1866 
  • FinTech first emerges in 1918 in America with the first electronic fund transfer (the Fedwire Funds Service). 
  • Telex arrives in 1966 

FinTech 2.0 (1967 – 2008)

  • Arrival of the ATM, BACS, CHIPS, NASDAQ, SWIFT, Bloomberg, the first mobile phone, online banking, and the internet
  • Single European Act 
  • The UK’s “FinTech Big Bang” Movement 

FinTech 3.0 & 3.5 (2008 – Present)

  • Aftermath of the 2008 Financial Crisis 
  • Mass influx in tech startups 
  • Cryptocurrencies emerge 
  • Person-to-person FOREX  

The UK and European Influence Over Fintech Development 

The UK and European powers have consistently changed the influences and trends governing FinTech for decades. The EU, in particular, is a powerful driving force which has led to changes both in FinTech and in the world’s markets, as outlined clearly and understandably with IG’s timeline on political impacts on FOREX trading. A notable example of UK influence on the FinTech and FOREX markets is during the “Big Bang.” 

The Big Bang of FinTech

One such notable policy change by the UK was in 1986, which ushered in a financial revolution and set London to become one of the global financial capitals of the world. Essentially an agreement was reached between two heads of state and the London Stock Exchange, which led to massive modernisation and innovation into UK markets. Electronic trading became the norm, companies and traders could take on multiple roles, and brokers could organise themselves into companies. The changes made by the policies outlined in 1986 brought the average £700 million traded in the UK up to £5.07 billion. 

With the rearing difficulties of Brexit and other setbacks, however, the Bank of England has a lot to do in order to maintain financial stability and to make use of new technologies to disperse resources more efficiently, or else risk the damages caused by yet another financial crisis. 

The Fintech Revolution and FOREX 

Understanding IG’s timeline of how UK policies have affected FinTech and FOREX development is key to mapping out past and predicting future trends. Before FinTech branched into FOREX trading, only a few brokers and investors could make use foreign exchange trading. With FinTech, however, these trades can be facilitated right at home, and thus opens up the potential for FOREX trading to everyone and provides a more democratic global stage for FOREX trading. For an industry that nets $5.3 trillion on average every day, this is essential. 

Cryptocurrencies 

Cryptocurrencies are the next evolution of FinTech and FOREX. Though there was a lot of disappointed hype due to Bitcoin not too long ago, markets have mostly stabilised. More than that, however, the technology behind Bitcoin and other cryptocurrencies have every FinTech company interested. Blockchain technology is being invested into currently due to the lowered risk of fraud and hacking, as well as how it can facilitate faster transactions by eliminating intermediary steps. 

FinTech and FOREX are now forever intertwined as the world moves to increase digitisation.

Author

  • Editorial Director of the The Fintech Times

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