10 Years of FinTech Rising
This month, we mark our 10th anniversary. I’ll be taking a look back at the last 10 years of FinTech and the evolution of digital payments and assets, following the idea that looking back at history gives clues to predict the future. One of the best ways to see where you are going is to look back at where you came from.
I wrote and published the first articles that evolved into the FinTech newsletter in October 2014 after attending the Sibos corporate banking conference in Boston. The founding post that laid out the themes that have focused our articles came in December 2014 in an article titled, “Three developments indicating the future of money, finance, and payments.”
These three themes were important because of “the long-term shift they portend for the future of money, finance, and payments:”
The legitimation of bitcoin
The internationalization of the Renminbi
The resilience of the existing payments system"
1. The legitimation of bitcoin
I held off on publishing this article until after election day because I wanted to see how the crypto-funded Senate race to defeat Ohio Senator and Senate Banking Committee Sherrod Brown. He lost to Bernie Moreno, a car dealer and blockchain entrepreneur.
Bitcoin prices surged to a record, following large inflows to the bitcoin ETFs approved in January of this year. CoinDesk put the rest in a long headline, “Crypto Is a Clear Winner With Trump as GOP Takes Senate, Sherrod Brown Loses and Gensler Likely Heading for Door,” ending Gensler’s crusade to kill digital assets in the United States.
It’s a far cry from my report from Sibos 2014, where I quoted a JP Morgan banker saying, “To the Bitcoin people, the world is a happy place with no regulations, and money is just flowing. Then they get hit with sanctions and see what happens.”
JP Morgan now offers a robust set of services built on blockchain technology and featuring its own JP Morgan Coin. “We’re trying to create a smart 24×7 system that’s recognizing the cross-border nature of money, and that requires very little intervention,” reported a JP Morgan Banker at the 2024 Federal Reserve Bank of Chicago Payments Symposium.
Still, the institutional acceptance of bitcoin, specifically, but also blockchain and digital asset technologies, generally, has been the taint of bad actors and the combativeness of regulatory agencies. I covered this in “Disentangling the Crypto Crash of 2022.”
2. The internationalization of the Renminbi
This theme began as a result of the increase of RMB-based payments between China and its major Western trading partners when, in October 2014, SWIFT reported that trade settlements in RMB between China and Germany had increased 151% and between Canada and China by 346% over the previous year.
Over the past 10 years, I have seen two related developments: first, “dedollarization” and, second, the development of China’s robust mobile payment apps and digital RMB.
The acceleration of bilateral trade denominated in RMB has increased to the point that in the last couple of years, “dedollarization” became a term, with help from none other than Elon Musk. Although I do not believe the end of the USD as the world’s reserve currency is imminent, I do believe that “edge cases,” both public and private, will continue to change trade payments.
As a case in point, in October 2024, Russian President Vladimir Putin discussed the development of a trade settlement among the BRICS nations, presumably to temper the ability of Western nations to sanction currency flows into Russia. It was not much of a success. “Russian president’s goal to de-dollarize world economy alarms members that do not want bloc to turn against west,” reports The Guardian. I expect these sorts of efforts to continue.
More in keeping with the payments focus on FinTech–PaymentsTech still dominates FinTech investment–the increasing development of payments apps in China continues to lead digital payments development. The popular Alipay and WeChat Pay mobile apps have converged with the digital RMB, as discussed in “China Takes Next Steps in Retiring Physical Cash.”
This theme has expanded beyond the initial RMB focus to include topics related to the future of the U.S. dollar as the world’s reserve currency and the expansion of central bank digital currencies and stablecoins and their role in international payments.
3. The resilience of the existing payments system
The Sibos 2014 article also mentioned the long-standing payments comments that the United States has never killed a payments system. This has gone to such extremes that The New York Times reported on September 1, 2024, how “America Must Free Itself from the Tyranny of the Penny.”
That was not exactly what I had in mind at the time, however. The big story in the fall of 2014 was Apple Pay. What Apple Pay showed then was the way in which underlying U.S. payments systems stay the same yet develop new and sometimes better ways for consumers to use them while keeping banks and payments card networks in the money.
Payments in the United States have evolved dramatically in the last few years. Payments are faster through payment apps and now settle instantly with realtime payments systems from the Clearing House (RTP) and Federal Reserve (FedNow).
Read about the evolution in our executive technology brief “Faster Payments for Faster Times." The brief highlights the increasing use of instant payments by financial services providers and the growing demand for faster payment options among businesses and consumers.
To those three themes, I would now add the "digital evolution of finance" and the "Democratization of wealth management." For the rest of the year, we will take a closer look at the past and future of these five themes.
Stay tuned.