Abbie Trinidad, Pauline Wanjahi, Onno van den Heuvel, Marianne Haahr, Robert Pasicko, Mabel Niala, Amir Gerges, David Meyers, Ngawang Gyeltsen, Alonso Martinez Caballero, and Bruno Mweemba
The term Fin Tech (Financial Technology) refers to software and other modern technologies used by businesses that provide automated and improved financial services. Various players in the FinTech ecosystem are: a) large, well established financial institutions such as banks, or the “incumbents”; b) big tech companies that are active in the finance services space but not exclusively so, such as Apple, Google, Facebook, and Twitter ; c) companies that provide infrastructure or technology that facilitates financial services transactions, including market utilities, and exchanges and d) disruptors: fast-moving companies, often startups, focused on a particular innovative technology or process. The financial sector covers five broad functions: (i) payments, including across borders; (ii) saving and investing; (iii) borrowing; (iv) managing risks to income, savings, and transactions; and (v) receiving financial advice. Technology that underpins FinTech include those that collect data, structure or integrate data, and use data to improve on current systems or develop new products and services (mobile phones, satellites, Blockchain, Artificial Intelligence (AI), and Internet of Things (IOT, such as electronic tags). Robust interaction amongst the four types of players accelerates innovation, competition, and cost efficiencies. Fintech firms acquired $135.7 billion globally in investments during the last year and the total transaction value of digital payments is expected to reach $4.8 trillion in 2020.
Some common metrics defining the potential for FinTech opportunities include access to banking services, ownership of a mobile device, internet capability, and an enabling policy environment. Globally, around 2 billion people remain unserved by banks -- a primary gap FinTech seeks to address. Meanwhile, ownership of mobile phones and improving internet capacities lay the groundwork for technology adoption. Worldwide, Asia (including China + India) cornered more than 60% of the FinTech market’s funding by late 2018, while Latin-America contributed 2% and Africa, less than 1%.