FinTech

Financial technology, often shortened to fintech, is the technology and innovation that aims to compete with traditional financial methods in the delivery of financial services. It is an emerging industry that uses technology to improve activities in finance. The use of smartphones for mobile banking, investing services and cryptocurrency are examples of technologies aiming to make financial services more accessible to the general public. Financial technology 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. After reviewing more than 200 scientific papers citing the term 'fintech,' a study on the definition of fintech concluded that 'fintech is a new financial industry that applies technology to improve financial activities.' FinTech is the 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. FinTech can also be considered as “any innovative ideas that improve financial service processes by proposing technology solutions according to different business situations, while the ideas could also lead to new business models or even new businesses' Financial technology has been used to automate insurance, trading, banking services, and risk management. The services may originate from various independent service providers including at least one licensed bank or insurer. The interconnection is enabled through open APIs and open banking and supported by regulations such as the European Payment Services Directive. In trading on capital markets, innovative electronic trading platforms facilitate trades online and in real time. Social trading networks allows investors to observe the trading behavior of their peers and expert traders and to follow their investment strategies on currency exchange and capital markets. The platforms require little or no knowledge about financial markets, and have been described as disruptors which provide 'a low-cost, sophisticated alternative to traditional wealth managers' by the World Economic Forum. Robo-advisers are a class of automated financial adviser that provide financial advice or investment management online with moderate to minimal human intervention. They provide digital financial advice based on mathematical rules or algorithms, and thus can provide a low-cost alternative to a human advisers. Global investment in financial technology increased more than 2,200% from $930 million in 2008 to more than $22 billion in 2015. 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. In Europe, $1.5 billion was invested in financial technology companies in 2014, with London-based companies receiving $539 million, Amsterdam-based companies $306 million, and Stockholm-based companies receiving $266 million 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. Lithuania is starting to become a northern European hub for financial technology companies since the exit of Britain from the European Union. Lithuania has issued 51 fintech licenses since 2016, 32 of those in 2017.