The technology and financial sectors have a long symbiotic history. In almost any finance textbook, technology, together with deregulation, is deemed to be the main driver of the exponential growth in finance in the past 50 years. Finance is the biggest focus of technology firms, and technology (particularly information and communication) is a big budget item for banks and other financial sector firms. This is not surprising because finance is ultimately the business of collecting, storing, processing, and trading in information, unbounded by geography.
When the textbooks are revised in the next decade, they will still mention the key role of technology in finance—but with one difference. They likely will highlight how a new breed of hybrid financial technology firms—the so-called fintechs—transformed the financial sector when they went from supplying technology to financial firms to competing against them.
New applications of technology in finance have no doubt made consumers’ lives easier in myriad ways—automated teller machines (ATMs), debit and credit cards, and Internet banking, to name a few.