The first bank card was issued in 1951, the first e-Tender took place in the 70s, and in the 80s, the concept of Big Data appeared and the term “fintech” was mentioned for the first time, referring to a set of financial services that utilizes innovative technologies, such as advanced electronics, Big Data, the Internet of Things (IoT), neural networks, artificial intelligence, blockchain, etc.
Financial technologies are used by the majority of the world's population, so they develop first, pulling the real sector forward along with them. Everything that appears in the digital world is reflected quickly in the finance segment in one way or another. The emergence of blockchain is considered a revolution of sorts, so it is not surprising that banks are so keenly interested in the new technology, and blockchain specialists are worth their weight in gold today.
The victorious march of cryptocurrencies around the world has forced central banks to develop their own digital currencies, since states and banks are least interested in the traditional financial system being shaken to the core by the emergence of an alternative market. The CBDC (Central Bank Digital Currency) state digital currencies are designed to implement state control in the digital asset segment offered to the population by the state, preventing the funds from flowing into the shadow cryptocurrency sector. However, the situation has already gone too far to call it a regulators’ victory. Rather, it is a forced coexistence with attempts to take the best features out of the shadows and create their own digital product based on them.
Many other countries are following China and creating their own CBDC, while some are wondering how reasonable this path is. The digital US dollar is still a subject of discussion in the United States, and according to Bank of America’s estimates, it may be released in 2025-2030. The final decision rests with Congress. In the Caribbean, a CBDC pilot project was launched in the spring of 2021, becoming the world's first official digital currency. Since 14.01.2022, the project is no longer working as a result of a failure. S.Korea has completed the first stage of testing, the Japanese authorities will make a decision by 2026. A pilot group of 12 Russian banks has started testing the digital ruble. The launch of the project is planned before 2030.
One way or another, the emergence of blockchain technology and cryptocurrencies has forced state institutions to use up huge resources to catch up. Fintech, which has received such a powerful impetus, requires a large number of new specialists and places very high demands on their qualifications.
The development of cryptocurrencies, in turn, has launched the reverse flow of technical specialists from traditional banking to the most successful digital startups. Like the dot-com boom of the 90s, there is no doubt a “crypto-com" boom today, the only difference being that cryptocurrency projects are not traded on Nasdaq (except for Coinbase, but it is already a real titan, not a startup), and for the most part they have a life of their own, emerging and dying in the invisible cryptocurrency industry world. Partly in response to this, the traditional segment is forced to transform into entire ecosystems, trying to cover as many financial services as possible and maximizing its attractiveness for both customers and staff.
Today’s trend comprises states’ attempts to define their approaches to the adoption of the crypto industry. China’s total ban was supported by a few countries (Egypt, Iraq, Qatar, Oman, Morocco, Algeria, Tunisia, Bangladesh), while the rest are in the process of choosing the path of optimal coexistence with the newborn billion-dollar sector. States are greatly concerned with bringing the cryptocurrency market out of the shadows, primarily due to the impressive tax base. Creation of effective legislation, regulatory infrastructure and control of digital assets can help on this path, so that the industry can be integrated into traditional institutions. The use of cryptocurrency technologies is the most important direction of modern fintech, at the same time, cryptocurrencies themselves will most likely be displaced by state institutions to the industry periphery, while blockchain and state digital financial tools created on its basis will actively develop and be introduced into people’s daily lives.
Payment systems (Visa, Mastercard) are already preparing the ground for digital asset integration so as not to miss this market, banks are getting ready to issue their own stablecoins, major players are hunting down successful crypto startups to succeed in the M&A mergers and acquisitions market, an evolutionary leap is happening as we speak in cybersecurity, as the volume of fraud in the crypto industry is off the charts.
The question of the environmental friendliness of the traditional financial sector may arise sooner or later in the light of the desperate discussion about the environmental friendliness of Bitcoin mining, inadvertently launched by Elon Musk in 2021. By that time, driven by the trend of carbon neutrality, bitcoin may become so green that the banking sector will have to transform its entire document flow into NFTs, send employees to the newly formed virtual reality world (BankFi), and integrate servers into green mining farms, which in the process of persecution will already enjoy the best living conditions.
As for today, cryptocurrencies and tokens in their existing form cannot claim to be the money of the future, as long as there is a traditional financial system based on the Jamaica Monetary System of 1976 (floating exchange rates of currencies), which replaced the 1944 Bretton Woods Agreement (the gold standard), and is, in fact, mostly controlled by the United States with US dollar as the main reserve currency. At the same time, digital assets can claim a significant market share on a par with securities, commodities, etc. The cost and value of top digital projects will only grow, so regardless of the financial system, you can be earning in this segment right now. Niche digital assets (e.g. GameFi), metaverse currencies and other internal tokens will exist within their ecosystems and reflect their attractiveness to individual groups of involved users. The best way to describe the life cycle of popular niche projects (NFT, GameFi) is the saying: “during a gold rush, sell shovels.” An even more far-sighted approach is to create and sell infrastructure, rather than tools.
In any case, fintech is bound to surprise us with new opportunities, as well as ways to both earn and part with money. The industry got a second wind, which means that everyone should learn to breathe anew, so that there is no need for CPR later on.