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For many people, the financial technology revolution has not seemed like a revolution at all. It’s been merely an evolution of the services that they already had. Those who have always had bank accounts now also enjoy the convenience of internet banking, online shopping, and instant payments at store checkouts with their phone or card. To those same people, the advent of blockchain is merely the latest addition to the vast array of financial tools that they have at their fingertips. It’s another means of making payments, or it’s a new investment opportunity. So, why do proponents of the new financial world call fintech and blockchain a global revolution? Isn’t it merely the natural evolution of the financial services that we already have?
To understand how financial technology really can change the world we have to look first at the history of fintech and the impact that it has already had. The first modern example of fintech was in the centralization of banking systems in the 1970s. Before the 1970s, bank records were kept at each branch and transactions were processed manually. The entire process was extremely labor intensive and very expensive. The cost of all that manual processing was passed onto the customers, making bank accounts unaffordable for those on a low income.
The introduction of centralized computer systems in banks dramatically reduced the costs of processing standard banking transactions. That brought down the cost of having a bank account, and it made banking accessible to more people. It also led to banks to look for new ways to make a profit. Banks began to introduce new financial services to offer their customers.
That initial financial technology revolution ultimately grew to give those who had bank accounts instant access to a broader range of financial services. It also gave some of those who had never had a bank account the opportunity to join the banked population.
It might surprise you, though, to learn that an estimated two billion people in the world still do not have a bank account. It might surprise you more to learn that there is an estimated nine million unbanked in the US. If you are unbanked, it means you have no access to competitive loan finance, no automatic payment of regular bills and limited access to savings and investment opportunities. You can’t even shop online, and any business that you might have can only accept payment in cash. In other words, you are excluded from many of the financial transactions and services that the banked population takes for granted.
To see just how much of disadvantage being unbanked in the modern world can be, we can look at the positive effect of the launch of M-Pesa in Kenya in the 2000s. M-Pesa is a simple branchless banking system that allows people to store money on their mobile phones and make payments using secure text messages. When M-Pesa was introduced in Kenya, it revolutionized many people’s lives. It tripled financial inclusion in just five years, and it lifted 850,000 people out of poverty. Today, 50% of Kenya’s GDP flows through M-Pesa.
The M-Pesa effect is only one example of the huge impact that financial technology can have. The revolution has only just begun. Blockchain technology is expected to allow even more people to enter the world economy. Peer-to-peer cryptocurrencies like Bitcoin are just the beginning. According to the Canadian business author Alex Tapscott, blockchain has the potential to change the way that wealth is distributed and even solve social inequality.
The peer to peer nature of financial technologies like blockchain, however, places cryptocurrencies like Bitcoin outside the control of governments and central banks. The question is, will the fintech revolution be allowed to continue to become the free force for good that it promises to be? Or will the establishment put down the revolution and bring technologies like blockchain into the mainstream fold?

Fintech and Blockchain
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Published by Davide Zucchetti

Co-founder HiSkill; Business School Sole 24 Ore Professor; ICOBooster Co-Founder; FintechReview Co-Founder