How Banks Emerged Historically

This article is written by Nardine B. M’barek, a Contributor Author at Startup Turkey.

Chris Skinner is an independent commentator on the financial markets and FinTech through his blog, He is Chair of the European networking forum The Financial Services Club and Nordic Finance Innovation, as well as being a Non-Executive Director of the Fintech consultancy firm 11:FS. He joined us during Startup Turkey 2016, and delivered a speech that he called ‘ 2016: The year banks disrupt FinTech’.

Mr. Skinner is a commentator on financial markets and is interested in everything related to the FinTech industry especially banks and their evolution. He has written multiple books related to this matter, in which he explained how the banking system changed throughout the years, and what exactly caused this drastic change.

The fundamental transformation that is caused by what we can call the third revolution is characterized by the fact that people today are able to connect and send messages to each other immediately and easily through the internet. That revolution is being called the third one even if we have got others in different domains, but when it comes to the field of commerce and economy, we have only seen three main and big revolutions.

This revolution is, however, very young. It has not formed itself entirely until now. The first computer was invented in 1946 and was called the ENIAC, and was used mainly to forecast weather, making 70 years in a revolution a very short period of time, knowing that we still have a long way to go in order to achieve a fully-evolved revolution that focuses on everything.

If we take a look at the last two big revolutions, the Industrial and the Agricultural revolution; the latter took hundreds of years to emerge so that we were able, as human beings, to move from a Nomad population to farmers and villagers allowing us to finally get settled, and create a home on the land while planting seeds and goods from which we can profit on many levels. The exchange of abundant goods made us invent money.

Then we had the Industrial Revolution, which places itself based on the steam as a power source. We invented a new system during the Industrial Revolution called banking. Banks were created by the governments of the countries to enable their populations to exchange goods in another form other than gold and silver.

We are uncertain today when it comes to where exactly is the revolution in the networking world going to go. But, what we do know is that it is going to get rid of the forms of value exchange that we previously knew, and created for the Industrial Revolution such as the Check Book, and paper-based checks. This is not something that works today since the idea of putting a check in a stamped letter and sending it in the post seems ridiculous in the age which we could call ‘the Internet Age’.

We are doing it nowadays because it is still expected, but we are going to get rid of it anyway, it is only a matter of time since it is slow and rather expensive. If during these years, in which we have created technology and launched innovation in different fields, we still send checks through the post that take 28 days to get processed, and more than $50 to be processed, then it is not acceptable compared to our ability to immediately connect to each other.

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