"FinTech," a contraction of "financial technology," refers to technology-enabled financial solutions. It is often seen today as the new marriage of financial services and information technology. However, the interlinkage of finance and technology has a long history and has evolved over three distinct eras, during which finance and technology have evolved together: first in the analogue context; then with a process of digitalization of finance from the late twentieth century onwards; and since 2008, a new era of FinTech emerging in both the developed and developing world. This new era is defined not by the financial products or services delivered, but by who delivers them and the application of rapidly developing technology at the retail and wholesale levels. This latest evolution of FinTech, led by start-ups, poses challenges for regulators and market participants alike, particularly in balancing the potential benefits of innovation with the possible risks of new approaches. We analyze the evolution of FinTech over the past 150 years, and on the basis of this analysis, argue against its too-early or rigid regulation at this juncture.
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