Financial Technology (FinTech): Concept, Characteristics, and Recent Development


Finance manages the pool of money. Therefore, the very nature of the industry demands that there should be high trust between members and the companies managing the pool of money. Despite all this awareness, there are financial crises where people lost their invested money and trust for the participants of the financial industry.

The development of FinTech started after the financial crisis of 2008 when the technology start-ups started to operate in the financial domain with a purpose of operating with trust and transparency. The events such as the emergence of the credit card industry, use of credit cards over the Internet for e-commerce transactions, point of sales machines etc. were the early achievements for FinTech industry. The emergence of PayPal played a revolutionary role for the development of FinTech Industry. Similarly P2P(Peer-to-Peer) lending, Payday lending and Crowdfunding were some of the early innovative lending business models by some of the FinTech companies. FinTechs were solving the prime cause of 2008 financial crisis i.e. trustful lending and security of find, through their services. Insuretech is the advancement of FinTechs in the field of Insurance. 

Similarly, with the advancement in the capability of technology like high network speed, faster computing, mobile devices, Web 2.0, cloud computing etc., FinTech has made a huge transformation. Now, the FinTech Ecosystem has become worth $ 54.4 billion in 2018. Some of the most disrupted financial sectors by FinTechs are:

  • Banking and Capital Markets
    • Consumer Banking 
    • SME Banking
    • Brokerage Services
    • Commercial Banking
    • Investment Banking
    • Market Operators & Exchanges
  • Asset and Wealth Management
    • Investment & Wealth Management
    • Fund Operators
  • Fund Transfer & Payments
  • Insurance
    • Reinsurance
    • Insurance Intermediary
    • Property & Casualty Insurance (Life Insurance)

Some of the transformative models brought in by FinTechs are listed below:

  1. Through payment wallets, they have been able to establish that payments could be done peer-to-peer (P2P) and does not necessarily need intermediaries like banks and credit card companies.
  2. They have also transformed the usual way of dealing in cash by making the payment interfaces seamless.
  3. Facilitating payments between friends and family using phone contacts and social media.

Characteristics of FinTech (EYs CLASSIC Model)

  1. Customer Centric (C)
  • Simple, easy-to-use, high convenience product/services.
  • “Need-focused” propositions designed around particular consumer use cases and pain points
  • High degree of customer engagement

2. Legacy-free (L)

  • Purpose-built systems designed around digital channels and fulfilment
  • Little drag from discontinued products, prior acquisitions or regulatory liabilities

3. Asset-Light (A)

  • Low fixed asset base creating significant operating leverage
  • Balance sheet frequently rented or outsourced to other parties

4. Scalable (S)

  • Scalability built into the business model by leveraging partnerships, distribution and simplicity
  • Low capital requirements

5. Simple (S)

  • Fundamentally simple customer proposition
  • Highly focused and transparent business processes

6. Innovative (I)

  • Innovation across the spectrum, e.g., new business models, products and services and delivery models.

7. Compliance Light (C)

  • Simple and unbundled models that are often designed as to avoid the need for authorisation

Recent Development in FinTech Industry

  1. Cloud Technology Infrastructure Model
  2. Machine Learning in financial service
  3. Blockchain
  4. Customer Intelligence
  5. Robotic Process Automation


Arjunwadkar, P. Y., FinTech, The Technology Driving Disruption in the Financial Services Industry, CRC Press

Kuo Chuen, D. L. & Low, L. Inclusive FinTech, Blockchain, Cryptocurrency and ICO, World Scientific




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