The Evolution of Financial Technology (Fintech)

Abstract

The term “financial technology” (or FinTech) refers to the application of technology for the provision of financial services. FinTech companies are attracting the interest of both financial services users and investment firms, which see them as the future of the financial sector. This article examines the drivers of the evolution of the FinTech sector. These include supply-side factors, related to the digital revolution, and demand-side factors, related to the emergence of new consumer patterns. A more detailed analysis is provided regarding the development of FinTech in payment services, lending and funding. We also focus on the role of banks with respect to FinTech, i.e. how big traditional players react and what alternative strategies they could adopt. We explore the ensuing challenges for regulators, discuss different approaches to the protection of financial services users and outline the existing regulatory framework of the European Union (EU). In the last section of the article, a brief overview of the FinTech landscape in Greece is provided.

Keywords: FinTech, digitisation, payment services, regulatory framework

JEL Classification: G21,G23, G28,G38, O3