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Timeline: Financial Services

Updated Wednesday 10th April 2019

Insurance, ATMs on every corner and PayPal might be products and services we take for granted nowadays but when were these all introduced? Find out in our timeline...

The history of financial services

Take a look at the history of financial services in the UK since the 17th century and the increasing globalisation. 

Wikipedia
Modern day pound sterling note selection

Use of bank notes

1601

Receipts began to be issued but goldsmiths for valuables deposited. Later these receipts became known as bank notes. Merchants found that they could exchange these notes to settle their financial obligations – in effect, starting the use of paper currency in the economy. With the issuance of bank notes to support money lending, the goldsmiths became the country’s first banks.

Earliest known British cheque

1659

The earliest British cheque was made payable to Mr Delboe for the grand sum of £400. It was dated “16th of February 1659” by merchant Nicholas Vanacker, to be drawn on City bankers Messrs Morris and Clayton.

Wikimedia
The Great Fire of London, depicted by an unknown painter

Fire insurance

1667

Fire insurance was the first to achieve corporate status, with the creation of the Insurance Office. Some of the first fire insurance policies were issued on properties rebuilt after the Great Fire of London in 1666.

Precursors of clearing houses

1691

Bank clerks started to meet in coffee houses or similar venues to set off the required cash movements relating to each cheque against others, with only the balance having to be paid in actual funds from one bank to another. These were the precursors of the clearing houses.These are financial institutions formed to facilitate the exchange of payments, securities, or transactions.

Wikimedia
Sealing of the Bank of England Charter (1694) by Lady Jane Lindsay, 1905.

The Bank of England founded

1694

The Bank of England was founded following war with France, initially to raise loans for wars. It was formed by a group of goldsmiths via a charter, ‘The Governor and Company of the Bank of England’.

Bank of Scotland logo

The Bank of Scotland formed

1695

The Governor and Company of the Bank of Scotland was established by an Act of the Parliament of Scotland on 17 July 1695.  Its is the fifth-oldest surviving bank in the United Kingdom and is the only commercial institution created by the Parliament of Scotland to remain in existence.

Life assurance

1700

Life assurance has been available in the UK since the late sixteenth century, when typically policies were only issued for a period of 12 month or for the term of an overseas voyage.

Wikimedia
J. M. W. Turner's Self-portrait, c. 1799, which will be featured on the new £20 note.

Bank of England gets monopoly in note-issuing

1708

An act of Parliament was passed prohibiting any other bank with more than six partners from issuing bank notes. This effectively gave the Bank of England the monopoly in note-issuing among the large banks in England.

The Royal Bank of Scotland formed in Edinburgh

1727

The Royal Bank of Scotland was chartered in 1727, with Archibald Campbell, Lord Ilay, appointed its first governor. On 31 May 1728, the Royal Bank of Scotland invented the overdraft. Today it is one of the retail banking subsidiaries of The Royal Bank of Scotland Group plc, together with NatWest and Ulster Bank.

Private banks

1746

Merchants started setting up their own private banks. The British Linen Bank was the first to establish a network of branches in several Scottish towns.

From The Story of Leeds by J. S. Fletcher

The impact of the industrial revolution

1750

The industrial revolution caused an expansion of commercial banks outside London to provide funding.

Wikimedia
London Stock Exchange in 1810

Formation of the Stock Exchange

1760

The formation of the London Stock Exchange itself occurred in 1760, and ----- when a number of brokers were thrown out of the Royal Exchange as a result of their poor behaviour.

The first clearing house

1770

Around 1770, bank clerks met at The Five Bells tavern, Lombard Street in London – the first clearing house.

The Gambling Act of 1774

1774

The Gambling Act of 1774 made it a requirement to have an interest in whatever was insured remaining unharmed! Otherwise unscrupulous people were resorting to foul play to collect the insurance. It is also known as The Life Assurance Act 1774. The Act prevented the abuse of the life insurance system to evade gambling laws. 

Economic weakness

1775

There was a prolonged period of economic weakness at this time, with certain assets (particularly land) falling in value. The Bank of England came under pressure, with its cash reserves being depleted, largely due to the extensive borrowing by the Government to finance the war with France.

Building societies

1775

The first building societies were formed as ‘mutual’ organisations (i.e. owned by their customers or members).

The spread of banks

1784

By now over 100 provincial banks were established outside London, and some specialist, private banks had been set up in London.

Wikimedia
Lloyd's Coffee House was the first organized market for marine insurance, drawing by an unknown cartoonist.

Insurance

1785

Insurance became widespread in the UK in the late eighteenth century onwards and remains the largest insurance industry in Europe and the second largest in the world.

Development of banking

1790

By now, there were 400 banks outside London and 68 in the city, most of which has less than six partners.

Growth of banks

1795

Start of the new, larger banks, some the result of mergers of the smaller ones.

Wikimedia
London Stock Exchange, the City of London

Stock Exchange expansion

1800

The nineteenth century saw the rapid expansion of the Stock Exchange in tandem with the Industrial Revolution and, in particular, the expansion of the mining industry and the emergence of the railway industry.

Trustees savings bank

1810

A new form of saving banks for the less wealthy emerged. The first ‘trustees savings banks’ was established, by the Reverend Henry Duncan of Ruthwell for his Dumfriesshire parishioners.

Banking Crises

1825

A number of banking crises and high levels of inflation brought about consolidation and development of rudimentary money transmission services.

The London and Westminster Bank

1834

The London and Westminster Bank opened as the first provincial bank to have branches in London. This was the birth of the banking system that we know today.

Printed bank notes

1855

Banknotes were originally hand-written and although they were partially printed from 1725, cashiers still had to sign each note and make them payable to someone. Notes were fully printed from 1855.

CC BY-SA 4.0 Stephen C Dickson via Wikimedia
The Tooley Street fire of 1861 by Stephen C Dickson

The Tooley Street fire

1861

The Tooley Street fire of 1861 led to overall claims of £1 million (a considerable amount at that time), and led to the insurance companies backing the creation of the London Fire Service, to which they made contributions.

The Stock Exchange

1920

The development of the Stock Exchange in the first half of the twentieth century was dominated by the financial effects of the two world Wars, and by the worldwide economic depression in the 1930s.  One major consequence was the rapid growth in the need for finance by the UK government, with the level of national debt thus rising substantially. A second consequence was the reduction in finance available for overseas investment.

Wikimedia
Crowd gathering on Wall Street after the 1929 crash

The Stock Market Crash of 1929

1929

The Stock Market Crash of 1929 occurred in October 1929. It started on October 24 and continued until October 29, 1929 when share prices on the New York Stock Exchange collapsed. It was the most devastating stock market crash in the history of the United States. This followed the London Stock Exchange's crash of September and marked the beginning of the 12-year Great Depression that affected all Western industrialised countries.

Foreign exchange controls

1939

The introduction of constraints on the amounts of foreign currency that could be acquired by both individuals and companies – known as foreign exchange controls – reduced the scope for investment abroad. These controls were to remain in place for 40 years before they were abolished.

CC BY-SA 3.0 photo taken (by BB98uk) back in the late 1980's via Wikimedia
Bank of England

Bank of England nationalised

1946

The Bank of England was nationalised by the labour government

Credit cards introduced

1950

The first universal credit card, which could be used at a variety of establishments, was created by Diners’ Club in 1950. Another major card of this type, known as a travel and entertainment card, was established by the American Express Company (Amex) in 1958.

Illustration for magnetic ink character recognition: The first section of numbers represents the 9 digit bank routing/transit number.

MICR

1959

Magnetic ink character recognition (MICR) speeded up and reduced cost of cheque transmission.

Bankograph

1961

A bankograph was installed in the Bank of NYC for deposits. It was withdrawn shortly thereafter due to a lack of customer acceptance.

Wikimedia

Barclaycard introduced

1966

Barclaycard was launched in June 1966, initially as a charge card but after the Bank of England's agreement to the offering of revolving credit, it became the first credit card in the United Kingdom in November 1967.

InterBank Card Association

1966

The InterBank Card Association (now MasterCard) emerged – the first general purpose open loop credit card.

ATMs

1967

The first ATM was introduced in the late sixties.

DACS

1968

Barclays installed a DACS automatic cash dispenser.

Magnetic strip

1969

Speytec, a UK startup, introduced magnetic strips on cards. 

Companies must buy into SERPS

1975

The Social Security Pensions Act 1975 obliged companies either to contract into the State Earnings Related Pension Scheme (SERPS) or to provide their own scheme on at least equally good terms for their employees.

The Right to Buy scheme

1979

Introduced by the Conservative government in 1979, Right to Buy allows most council tenants to buy their council home at a discount.

Privatisation of services

1980

Until 1980, insurance brokers were allowed to own the managing agencies who manged syndicates. This was one of the issues dealt with by the Lloyd’s act of 1982, which enforced divestment of manging agencies and brokers.

The Social Security Act 1986

1986

The Social Security Act 1986 gave a further boost to the pensions industry by allowing individuals to opt out of company schemes and take out personal pension plans. With many opting to buy their own products, the pattern of pension provision changed in the UK.

Liberation of the FS

1987

The liberalisation of the FS in 1986 and 1987 gave freedom to banks and building societies to diversify and seek finance from wholesale markets.

CC BY-SA 3.0 Autopilot via Wikimedia
Black Monday -- FTSE 100 Index from 19 July 1987 to 19 Jan 1988

Black Monday

1987

Black Monday happened on Monday, October 19, 1987, when stock markets around the world crashed. The crash began in Hong Kong and spread west to Europe and then spread to the United States. 

Liability

1994

Until 1994, ‘names’ with unlimited liability were the only source of capital. Following huge losses incurred during the years of account from 1988 – 92 (largely resulting from claims relating to asbestos and pollution), most ‘names’ were either unwilling or unable to continue to provide capital. Access to corporate capital was therefore permitted.

Acquisitions and mergers

1997

Further acquisitions and mergers, creating the ‘big five’ UK banks comprising Barclays, Lloyds TSB, RBS, HSBC and HBOS. Rise of investment funds.

PayPal is founded

1998

PayPal is founded as ‘Fieldlink’ a security-faced company allowing users to store encrypted information on mobile devices, and the forerunner of digital wallets

PayPal acquired

2002

eBay acquires PayPal for 1.5 billion dollars

State pension age rises

2006

In 2006 the state pension age was scheduled to be raised in stages to 267 by 2040.

CC BY-SA 3.0 David Shankbone via Wikimedia
The New York City headquarters of Lehman Brothers

Financial crisis 2007-2008

2007

The financial crisis of 2007–2008, also known as the global financial crisis is considered to have been the most serious financial crisis since the Great Depression of the 1930s.The crisis was followed by a global economic downturn, the Great Recession.

Quantative easing

2008

US Federal Reserve introduced quantative easing, followed by the Bank of England in 2009.

Funding for Lending

2012

The UK treasury and bank of England established the ‘funding for lending’ scheme in July 2012 to boost lending to households and business, thereby stimulating spending and growth in the economy.

Wikimedia

Metrobank

2014

Metrobank launched – the first banking licence granted for 150 years

Brexit

2016

On the 24th June 2016 the results of the United Kingdom European Union membership referendum showed 51.9% of the public wanted to leave the EU. Brexit, the withdrawal of the UK from the EU, will have a complicated and long-term impact on the UK's financial service sector and the rest of Europe. The full impact on the UK depends on whether the process will be a "hard" or "soft" Brexit.

 

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