The financial technology evolution has entered a new phase. It moved beyond applications to application programming interfaces that can integrate with financial institution systems to combine innovation with a more complete customer experience.

The first fintech era evolved slowly from the mid-19th century to the mid-20th century highlighted by the laying of transatlantic cable, which shifted the major global financial information communication method from steamships to telegraphs; the debut of the U.S. electronic fund transfer system, Fedwire (1918); and the introduction of credit card system in the 1950s.

The second wave, which progressed faster than Fintech 1.0 but still slow by today’s standards, began in the mid-1960s and continued until the Great Recession of 2008. That fintech development, led by traditional financial institutions, covered the swing from analog to digital tech. The era saw the rise of bank mainframe computers and the mass rollout of ATMs in the 1970s and 1980s; and the arrival of personal computers, online banking and e-commerce in the 1990s. The early 2000s, which some characterizes as the beginning of the modern business-to-business fintech era, companies started focusing on two central fintech areas, payments and banking-as-a-service.

This newest era, Fintech 3.0, arguably began around 2009, when the definition of B2B fintech started expanding; and startups, conventional tech, e-commerce and social media firms began to deliver financial products and services directly to the e-commerce community. The mass-market distribution of smartphones no doubt fueled accessed to the web and helped boost B2B, B2C, and B2B2C financial services.

Fintech organizations have also disrupted the traditional financial business models by invigorating emerging technologies in new ways to lure consumers searching for a more personal banking experience. Some of the diverse types of non-bank produced fintech includes mobile wallets and peer-to-peer payment apps, such as PayPal, Venmo, Square, Apple Pay and Google Pay; funding platforms, including Kickstarter, GoFundMe, Indiegogo, Patreon, CircleUp, and LendingClub; and robo-advisory services, such as Betterment, Ellevest, Wealthfront, SoFi Invest and Schwab Intelligent Portfolios.

A newer wrinkle of Fintech 3.0 involves embedded services. This is where a non-banking entity, product, or technology integrates a financial service or technology at the point of purchase — such as buy now, pay later or instant loan options.

Fintech continues to change how people (and businesses), invest, borrow, save and transfer funds through online and mobile services. Financial institutions can easily benefit from these innovations to deliver a better customer experience and win back market share. Credit unions and banks could become players in Fintech 3.0 by using open APIs to integrate some fintech innovation, particularly in the trending areas of voice recognition, financial information, machine learning, payment strategies and digitalization.

NXTsoft’s vendor agnostic OmniConnect Platform, the premier open banking marketplace for all API needs, uses cutting-edge cloud technology to connect fintech solutions to financial institutions, ensuring that NXTsoft clients have the most secure and reliable integration environment in the industry. OmniConnect provides the access needed to the financial institutions information, removing integration obstacles and providing a seamless connection between third-party API solutions and financial institutions’ core digital banking, item processing and financial systems.