Embedded Finance

CHAPTER TWOTHE ORIGINS OF EMBEDDED FINANCE

How big of an opportunity is embedded finance? We will answer this question throughout the book, but before we talk about where we are now and where we are going in the future, we must start with the past.

HOW WE GOT HERE: BANKING IN REVIEW

Let's begin our journey by going back to the beginning of financial technology—fintech. Some industry experts say fintech began in the 1950s when the first credit cards were mailed to 60,000 consumers in Fresno, California. Others point to the widespread adoption of ATMs in the 1970s. Still others look much farther back, all the way to the telegraph system used to transmit financial orders in the nineteenth century.

But the very earliest instance of “financial technology” may be even older than that. Cuneiform is a system of writing developed more than 5,000 years ago in Mesopotamia, what is now Iraq and Kuwait. It was here, and in a few other areas such as Egypt, India, and China, that agriculture developed to a point where dependable harvests could provide food for urban developments, which served as centers of commerce and other forms of specialized labor. On clay tablets unearthed in the Middle East, archeologists have discovered a system of accounting in cuneiform, including loans and credits to farmers for the purchase of seeds, land, and equipment. It may be said without exaggeration that financial services accompanied the very earliest flowering of civilization.

Note that this is well ...