This book outlines in detail the transition from traditional to modern banking. In six different chapters, we explore the effects of increased financial sophistication on a dimension of the loan contract: amount, interest rate, credit risk, collateral, currency, and lending technology. For each of these dimensions, we study the impact of sophisticated finance: securitization, interest rate hedging, credit risk hedging, patent collateral, foreign exchange, and fintech. We evaluate the economic benefits and costs of this new financial ecosystem, by relying on recent empirical research in banking and finance.