Financial Technology

Financial technology, also known as FinTech, is an industry composed of companies that use new technology and innovation with available resources in order to compete in the marketplace of traditional financial institutions and intermediaries in the delivery of financial services. Financial technology companies consist of both startups and established financial and technology companies trying to replace or enhance the usage of financial services of incumbent companies.

After reviewing more than 200 scholarly articles published over the past forty years which are referencing the term Fintech, professor Patrick Schueffel of the School of Management Fribourg derived the following definition for Fintech “Fintech is a new financial industry that applies technology to improve financial activities”. Irene Aldridge and Steve Krawciw note several areas of Fintech proliferation, including automation of insurance, trading and risk management, just to name a few.

Looked at from a procedural perspective, the term 'FinTech' refers to new applications, processes, products or business models in the financial services industry, composed of one or more complementary financial services and provided as an end-to-end process via the Internet. The services may originate from various independent service providers including at least one licensed bank or insurance. The interconnection is enabled through open APIs and supported by regulations such as the European Payment Services Directive. These solutions can be differentiated into at least five areas.

Global investment in financial technology increased more than twelvefold from $930 million in 2008 to more than $12 billion in 2014. The nascent financial technology industry 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.

In the United States, there are numerous FinTech companies and startups, including Debtbench, Affirm, Betterment, Behalf, Birch Finance, Clearwater Analytics, Fundera, IEX, Kabbage, Lending Club, Money.net, Nomis Solutions, Plaid, Prosper, Robinhood, SoFi, Square, Stripe, Think Finance, Wealthfront and GreenSky LLC.

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