Fintech, a clipped compound of "financial technology", refers to firms using new technology to compete with traditional financial methods in the delivery of financial services.[3][4][5] The use of smartphones for mobile banking, investing, borrowing services,[6] and cryptocurrency are examples of technologies designed to make financial services more accessible to the general public. Fintech companies consist of both startups and established financial institutions and technology companies trying to replace or enhance the usage of financial services provided by existing financial companies.
Robo-advisers are a class of automated financial adviser that provide financial advice or investment management online with moderate to very little human intervention.[8] They provide digital financial advice based on mathematical rules or algorithms and can even create and manage automated investment portfolios. This can provide a lower-cost alternative to a human adviser and also has the ability to avoid human error and bias.[9]
Global investment in financial technology increased more than 12,000% from $930million in 2008 to $121.6 billion in 2020.[10] 2019 saw a record high with the total global investment in financial technology being $215.3 billion, of which Q3 alone accounted for $144.7 billion in investment.[11]
In H1 2021, fintech deal volume hit 2,456 deals accounting for $98 billion in investment. Global VC investment was higher than $52 billion in H1’21, close to the annual record of $54 billion seen in 2018.[11]
H1’21 saw $21 billion in corporate-affiliated VC investment. CVC deal volume reached a high of 284 in Q1’21, and then grew further to 312 in Q2’21.[12]
The Americas saw about $51.4 billion of fintech investment in H1’21, with the US alone accounting for $42.1 billion. In the EMEA region, investment in fintech was very robust at $39.1 billion. In Asia-Pacific, fintech investment grew between H2’20 and H1’21—rising from $4.5 billion to $7.5 billion, although it was subdued in comparison with previous record highs.[13]
The nascent financial technology industry in London has seen rapid growth over the last few years, according to the office of the Mayor of London. Forty percent of the City of London's workforce is employed in financial and technology services.[14] As of April 2019, about 76,500 people form the UK-wide FinTech workforce, and this number is projected to rise to 105,500 by 2030. Of the current fintech workforce in the UK, 42% of workers are from overseas.[15]
In Europe, $1.5billion was invested in financial technology companies in 2014, with London-based companies receiving $539million, Amsterdam-based companies $306million, and Stockholm-based companies receiving $266million in investment. After London, Stockholm is the second highest funded city in Europe in the past 10 years. Europe's fintech deals reached a five-quarter high, rising from 37 in Q4 2015 to 47 in Q1 2016.[16][17]Lithuania is starting to become a northern European hub for financial technology companies since the news in 2016 about the exit of Britain from the European Union. Lithuania has issued 51 fintech licenses since 2016, 32 of those in 2017.[18]
Fintech companies in the United States raised $12.4 billion in 2018, a 43% increase over 2017 figures.[19]
In the Asia Pacific region, the growth will see a new financial technology hub to be opened in Sydney, in April 2015.[20] According to KPMG, Sydney's financial services sector in 2017 creates 9 per cent of national GDP and is bigger than the financial services sector in either Hong Kong or Singapore.[21] A financial technology innovation lab was launched in Hong Kong in 2015.[22] In 2015, the Monetary Authority of Singapore launched an initiative named Fintech and Information Group to draw in start-ups from around the world. It pledged to spend $225 million in the fintech sector over the next five years.[23]
While Singapore has been one of the central fintech hubs in Asia, start ups in the sector from Vietnam and Indonesia have been attracting more venture capital investments in recent years. Since 2014, Southeast Asian fintech companies have increased VC funding from $35 million to $679 million in 2018 and $1.14 billion in 2019.[7]
Africa's overall fintech sector has expanded quickly. There were more than 1000 active businesses as of April 2022, up from 450 in 2020.[24] The venture capital sector, which saw deal value rise from $485 million in 2020 to $3.23 billion in 2021, was mostly responsible for the increase in investment in Africa. About half of this investment was made in fintech with Nigeria, Kenya and South Africa remaining key markets in the West, East, and South respectively. [25][26][27]
Awards and recognition
Financial magazine Forbes created a list of the leading disruptors in financial technology for its Forbes 2021 Global Fintech 50.[28]
Finance is seen as one of the industries most vulnerable to disruption by software because financial services, much like publishing, are made of information rather than concrete goods. In particular blockchains have the potential to reduce the cost of transacting in a financial system.[30] However, aggressive enforcement of the Bank Secrecy Act and money transmission regulations represents an ongoing threat to fintech companies.[31] In response, the International Monetary Fund (IMF) and the World Bank jointly presented Bali Fintech Agenda on October 11, 2018[32] which consists of 12 policy elements acting as a guidelines for various governments and central banking institutions to adopt and deploy "rapid advances in financial technology".[33]
The New York Venture Capital Association (NYVCA) hosts annual summits to educate those interested in learning more about fintech.[34] In 2018 alone, fintech was responsible for over 1,700 deals worth over 40 billion dollars.[35] In 2021, one in every five dollars invested by venture capital has gone into fintech.[36]
Challenges and solutions
In addition to established competitors, fintech companies often face doubts from financial regulators like issuing banks and national governments.[37][38] In July 2018, the Trump Administration in the United States issued a policy statement that allowed fintech companies to apply for special purpose national bank charters from the federal Office of the Comptroller of the Currency.[39]Federal preemption applies to state law regarding federally chartered banks.[40]
Data security is another issue regulators are concerned about because of the threat of hacking as well as the need to protect sensitive consumer and corporate financial data.[41][42] Leading global fintech companies are proactively turning to cloud technology to meet increasingly stringent compliance regulations.[43]
The Federal Trade Commission provides free resources for corporations of all sizes to meet their legal obligations of protecting sensitive data.[44] Several private initiatives suggest that multiple layers of defense can help isolate and secure financial data.[45]
In the European Union, fintech companies must adhere to data protection laws, such as GDPR. Companies need to proactively protect users and companies data or face fines of 20 million euros, or in the case of an undertaking, up to 4% of their total global turnover.[46] In addition to GDPR, European financial institutions including fintech firms have to update their regulatory affairs departments with the Payment Services Directive (PSD2), meaning they must organise their revenue structure around a central goal of privacy.[47]
The online financial sector is also an increasing target of distributed denial of service extortion attacks.[48][49] This security challenge is also faced by historical bank companies since they do offer Internet-connected customer services.[50]
European regulation on fintechs
European Regulation on Fintechs refers to the body of laws, directives, and guidelines that govern the operation, development, and innovation of financial technology (fintech) companies in the European Union (EU). As the fintech sector has rapidly evolved in recent years, the European Commission and European Parliament have introduced various regulatory frameworks to maintain financial stability, promote innovation, and protect consumer interests. These frameworks aim to create a single market for fintech services, while also addressing the emerging risks and challenges associated with new financial technology.[51][52]
↑ Chen, Chiu-Chin; Liao, Chia-Chun (September 15, 2021). "Research on the development of Fintech combined with AIoT". 2021 IEEE International Conference on Consumer Electronics-Taiwan (ICCE-TW). IEEE. pp.1–2. doi:10.1109/icce-tw52618.2021.9602952. ISBN978-1-6654-3328-0. ISSN2575-8276. Fintech is an industry that uses a seres of technological innovations such as cloud computing and big data to allow technology to serve finance and greatly improve financial efficiency.
↑ Sanicola, Lenny (February 13, 2017). "What is FinTech?". Huffington Post. Retrieved August 20, 2017.
Teigland, R.; Siri, S.; Larsson, A.; Puertas, A. M.; Bogusz, C. I., eds. (2018). The Rise and Development of FinTech (Open Access): Accounts of Disruption from Sweden and Beyond. Routledge. ISBN978-0815378501.
Axis Bank Limited, formerly known as UTI Bank (1993–2007), is an Indian multinational banking and financial services company headquartered in Mumbai, Maharashtra. It is India's third largest private sector bank by assets and Fourth largest by Market capitalisation. It sells financial services to large and mid-size companies, SMEs and retail businesses.
Kantox Ltd is a multinational fintech company that offers Currency Management Automation software for corporate clients. Their software automates the pre-trade, trade, and post-trade stages of the corporate foreign exchange (FX) workflow.
Ripple Labs, Inc. is an American technology company which develops the Ripple payment protocol and exchange network. Originally named Opencoin and renamed in 2015, the company was founded in 2012 and is based in San Francisco, California.
OurCrowd is an online global venture investing platform that empowers institutions and individual accredited investors to invest and engage in emerging technology companies at an early stage while still privately held. Based in Jerusalem, the company launched in February 2013, and has since opened overseas branches in the United States, the United Kingdom, Canada, Australia, Spain, Singapore, Brazil, and the UAE.
Rakefet Russak-Aminoach served as President and CEO of Bank Leumi le-Israel B.M. since May 1, 2012, to October 2019. Since September 2020, Russak-Aminoach is the Managing Partner of Team8 Fintech, a company-building platform part of the Team8 Group, focused on building and scaling fintech companies.
Cross River is an American financial services organization that provides technology infrastructure to fintech and technology companies. Based in Fort Lee, New Jersey, Cross River services its clients with embedded payments, cards, lending, and cryptocurrency solutions, and is an FDIC member. Cross River is noted for its embrace of the trend in the financial services sector towards API-based payment platform services.
Ant Group, formerly known as Ant Financial, is an affiliate company of the Chinese conglomerate Alibaba Group. The group owns the world's largest mobile (digital) payment platform Alipay, which serves over 1.3 billion users and 80 million merchants, with total payment volume (TPV) reaching CN¥118 trillion in June 2020. It is the second largest financial services corporation in the world, behind Visa. In March 2019, The Wall Street Journal reported that Ant's flagship Tianhong Yu'e Bao money-market fund was the largest in the world, with over 588 million users, or more than a third of China's population, contributing cash to it.
Revolut is a global neobank and financial technology company with headquarters in London, UK that offers banking services for retail customers and businesses. It was founded in 2015 by Nikolay Storonsky and Vlad Yatsenko. It offers products including banking services, currency exchange, debit and credit cards, virtual cards, Apple Pay, interest-bearing "vaults", personal loans and BNPL, stock trading, crypto, commodities, human resources and other services.
Financial technology is an industry composed of companies that use technology to offer financial services. These companies operate in insurance, asset management and payment, and numerous other industries. FinTech has emerged as a relatively new industry in India in the past few years. The Indian market has witnessed massive investments in various sectors adopting FinTech, which has been driven partly by the robust and effective government reforms that are pushing the country towards a digital economy. It has also been aided by the growing internet and smartphone penetration, leading to the adoption of digital technologies and the rise of FinTech in the country
FinTech Awards are several award ceremonies, most of them unrelated, which are held worldwide to recognize excellence in financial technology as assessed by either a public vote or panels of judges. There are typically many categories, winners and prizes. Hundreds of companies, mostly startups, participate as candidates.
Regulatory technology, Abrv: RegTech, is the use of information technology to enhance regulatory and compliance processes. RegTech is most usefully applied to heavily regulated industries and activities such as financial services, gaming, healthcare, pharmaceutical, energy and aviation. RegTech puts a particular emphasis on regulatory monitoring, reporting and compliance and aims to enhance transparency as well as consistency and to standardize regulatory processes, to remove ambiguity from regulations and provide higher quality outcomes at a lower cost.
Funding Societies is a Southeast Asia’s digital financing platform for small and medium-sized enterprises (SMEs), headquartered in Singapore. It was the first such platform in Singapore to engage an escrow agency to independently and safely manage investors’ funds. In Indonesia it is known as Modalku. Since its launch, it has disbursed more than US$2.6 billion in business financing to MSMEs through more than 5.1 million loan transactions.
TransferMate is a B2B payments technology which was founded in 2010. It is headquartered in Kilkenny, Ireland, and has other offices in San Francisco, New York and Sydney. According to the company, as of late 2017, over $11 billion had been transferred through TransferMate's Technology. TransferMate's network of payment transfer systems is licensed and regulated in all 50 US states, Canada, Australia, New Zealand and in Europe.
The Astana International Financial Centre (AIFC) is a financial hub in Astana, Kazakhstan that officially launched on July 5, 2018.
Solaris SE is a credit institution licensed in Germany, with headquarters in Berlin and branches in London, Paris, Milan, Madrid and Vilnius.
Zeta is a next-gen banking tech company by founders Bhavin Turakhia and Ramki Gaddipati in 2015. The company provides credit and debit card issuer processing, BNPL, cloud banking, and "mobile experiences". Zeta provides its products to banks and fintechs globally.
nCino is a financial technology company headquartered in Wilmington, North Carolina. The company's cloud-based banking software helps financial institutions to gain efficiencies from digitizing and streamlining processes in commercial banking, small business banking, and retail banking. Pierre Naudé has served as CEO of nCino since its inception. The company's Bank Operating System is used by banks and credit unions with assets ranging from $30 million to $2 trillion. As of 2022, nCino is used in more than 1,750 financial institutions. nCino's customers include TD Bank, Truist Financial, and Santander Bank. nCino's strategic partners include Accenture, Deloitte Digital, PwC and West Monroe Partners.
Sir Rohinton Minoo "Ron" Kalifa is a British entrepreneur. He is the chairman of Network International, and formerly served as the chief executive officer of Worldpay Group from 2002 to 2013, continuing as vice chairman. Kalifa was appointed an Officer of the Order of the British Empire in the 2018 New Year Honours for his work in financial services and technology. He was later knighted in the 2022 Queen's Birthday Honours.
Thought Machine is a London-based cloud banking technology company that was founded in 2014 by Paul Taylor. It operates in the United Kingdom, Singapore, the United States, and Australia.
Fintech in Australia is the evolving intersection of financial services and advanced technology in the Australian market. It involves innovations in banking, investment, insurance, and personal finance, facilitated by technologies such as blockchain and artificial intelligence.
This page is based on this Wikipedia article Text is available under the CC BY-SA 4.0 license; additional terms may apply. Images, videos and audio are available under their respective licenses.
