I recently attended the FIA’s IDX conference in London and it was notable how many of the panel sessions centred on one particular topic. 

The kick-off panel for example, traditionally a big audience draw, consisted of a number of CEOs from the world’s largest exchanges and CCP’s. The moderator’s opening question was not about regulation, nor the geopolitical economic outlook. It wasn’t about underlying global macro trends, mergers, takeovers, trading volumes or the pressures of cost control across the global derivatives community. No, it was about fintech, and the subject took up the majority of the session.

So the theme was set for the rest of the conference. Over the next two days I listened to a number of panels examining and debating fintech, even moderating one myself, but in a quiet and contemplative moment I pondered just how “new” fintech really is and should we perhaps review what this emotive blended word really means?

How fintech got its name

In a recent academic paper entitled “The Evolution of FinTech: A New Post-Crisis Paradigm” (how lovely to see “paradigm” making a retro comeback) the authors trace the term back to the early 1990s, when it was a shortened form of the Citigroup initiated “Financial Services Technology Consortium”. Finsetechco clearly not making the cut.

However, while that may be the origin of the word itself, the ideas and movement behind solving problems in the financial markets, using innovation and technology, started way before that.  

Innovative tech, 19th century style

My first job in the City was with a company called Extel. Originally called The Exchange Telegraph Company, it was created back in 1872 (I arrived a little later) specifically to distribute financial and business information from the London Stock Exchange and other commercial markets direct to subscribers. The company had its roots in the then ground-breaking technology of telegraphy and utilisation of the world’s first submarine telegraph cable under the Atlantic used to transmit share price information from the New York Stock Exchange to London.

To give a bit of context, here are some other things that happened in 1872:

• The Marie Celeste was discovered abandoned in the Atlantic
• The following inventions were patented: the hydraulic elevator, the gasoline-powered engine, dried milk and the doughnut cutter
• The first woman was nominated for the US presidency (topical)
• The first international football match ever was played between Scotland and England

The Exchange Telegraph Company’s contribution was to establish tickertape telegraph machines in offices, gentlemen's clubs, banks and stockbrokers providing a continuous stream of commercial information. Essentially, they were using innovative technology to provide a faster market edge.

Today we’d probably call this a paradigm-shifting, disruptive, innovative fintech solution using a high-speed network. It probably started with some incubation and venture capital funding, no doubt. And yet this was almost a century and a half before fintech was even coined as a term, when the world was struggling with having to walk up flights of stairs and agonising over non-uniform doughnuts.

So the fintech movement has been around a little longer than perhaps we’d like to admit. Even though it was 144 years ago, the same fundamentals of fintech remain: the smart and innovative use of technology applied to real business problems to create measurable value and results, typically focussed around increased speed, improved efficiency and reduced cost. Some business principles never change.

As an aside, I can’t seem to rid my mind of the connection between the preponderance of luxuriant beards worn in the gentlemen’s clubs of the Victorian era and those seen today around fashionable fintech hipster ‘hubs’. Just a coincidence, I’m sure…

People, technology and the B-word

I increasingly hear the comment “too much tech and not enough fin”. I think what people are saying is that to make a successful financial technology firm, its the people who make the difference. Great technology companies need experienced and knowledgeable staff from many disciplines to make it all come together. It’s the balance, mixture and quality of people from both finance and technology backgrounds that really matter. Get the balance wrong and there may be problems, get it right and good things start to happen.

And finally, back to the conference. In addition to the F-word (Fintech), the blended B-word (not Brexit) was heard, unsurprisingly, a fair amount. It’s clear that this technology has the potential to revolutionise the financial and even broader commercial world. But, and perhaps it’s just me, I’m getting just a little bit of Blockchain fatigue. I wonder if we can have a global truce on media coverage stories for just for a couple of weeks … or maybe even a referendum?

Oh, and if you were wondering, Scotland and England ended up a dull sounding nil-nil draw.