Difining Fintech

Fintech is the area concentrated on adopting rising technology to create financial systems more powerful. Initially, the word only extended to successful start-ups aiming to disrupt particular aspects of the financial service sector, though more recently is sometimes used to cover a range of innovations taking place over the wider financial services system. This includes start-ups, typically established fintechs/scale-ups and traditional financial service institutions (FSIs).

Prime examples of fintech verticals include capital markets, challenger banks, mobile payments, peer to peer lending and robo-advisory. Many of these overlap with complimentary but less developed emerging sectors such as insurtech and regtech – even though many working definitions would consider these economic activities to fall within the fintech ecosystem.

The fintech economic system employs a range of tools and technologies, including platforms, cloud computing, advanced analytics, and Robotic Process Automation.

The word ‘Fintech’ has been explained as “the most over-hyped and under-estimated” growth that the financial services industry has seen in recent years. The demand for better banking – whether in terms of transparency, customer experience, and financial inclusion, has been made clear. What is less clear, even though, is who is best placed to adequately meet these changing expectations; start-ups, incumbents or a combination of the two. After half a decade of tussling, neither party has emerged victorious.

At the beginning of the fintech economic boom, now some five years back, many would have placed their bets on the ability of start-ups to disrupt the financial services industry. Start-ups were bullish in their ability to win over customers with better user experience and to innovate rapidly. Yet a review of London’s fintech ecosystem suggests that notable exemptions aside, it has emerged as one of the pragmatic partnerships rather than a clash of cultures.

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