Financial technology, also known as FinTech, is a line of business based on using software to provide financial services. FinTech companies are generally startups founded with the purpose of disrupting incumbent financial systems and corporations that rely less on software.
Global investment in FinTech more than tripled to $4 billion in 2013 from $930 million in 2008. The nascent FinTech industry has seen rapid growth over the last few years, according to the office of the Mayor of London. Forty percent of London's workforce is employed in financial and technology services.
In the Asia Pacific region, the growth will see a new FinTech hub to be opened in Sydney, Australia, in April 2015. There is already a number of strong FinTech players like Tyro Payments, Nimble, Stockspot, Pocketbook and SocietyOne in the market and the new hub will help further accelerate the growth of the sector. A FinTech innovation lab is also being launched in Hong Kong to help foster innovation in financial services using technology.
The National Digital Research Centre in Dublin, Ireland, defines FinTech as "innovation in financial services", adding that "the term has started to be used for broader applications of technology in the space – to front-end consumer products, to new entrants competing with existing players, and even to new paradigms such as Bitcoin".
In the financial advisory sector, established players such as Fidelity Investments have partnered with FinTech startups such as FutureAdvisor, allowing new technology to work within a prominent custodian.
Finance is seen as one of the industries most vulnerable to disruption by software because financial services, much like publishing, are made of bits rather than concrete goods. While finance has been shielded by regulation until now, and weathered the dot-com boom without major upheaval, a new wave of startups is increasingly "disaggregating" global banks.
Notable FinTech companies
- Lending Club
- Nucleus Software Exports Ltd.
- Prosper Marketplace
- Ripple Labs
- Square, Inc.
- Virtu Financial
- Big data analytics and predictive modeling
- Risk management
- Social media and collaboration
- Infrastructure and operational technologies (hosting, data bases, storage, networking, IT management).
- P2P lending
References and notes
- "What is FinTech?". Wharton FinTech. September 2014. Retrieved 9 December 2014.
- "The Boom in Global Fintech Investment" (PDF). Accenture. 2014. Retrieved 9 December 2014.
- "What is FinTech and why does it matter to all entrepreneurs?". Hot Topics. July 2014. Retrieved 9 December 2014.
- "Sydney FinTech hub based on London’s Level39 coming next April". BRW. November 2014. Retrieved 26 November 2014.
- "FinTech heats up competition with the youngest and fittest". Australian Financial Review. January 2015. Retrieved 5 January 2015.
- "FinTech Innovation Lab in Hong Kong Launches With Eight Firms". Forbes. February 2015. Retrieved 9 February 2015.
- "So what is FinTech?". National Digital Research Centre. March 2014. Retrieved 26 November 2014.
- "Fidelity Investments Forges Alliance With Low-Cost Player". The New York Times. October 2014.
- "How FutureAdvisor plans to shake up wealth management". Fortune. May 2014.
- "FinTech Innovation Labs eligibility criteria". Accenture. Retrieved 26 November 2014.