Recent Developments in the FinTech Industry

Forthcoming, Journal of Financial Management, Markets and Institutions

36 Pages Posted: 15 Apr 2020 Last revised: 29 Apr 2020

See all articles by Thomas J. Chemmanur

Thomas J. Chemmanur

Boston College - Carroll School of Management

Michael B. Imerman

Claremont Colleges - Peter F. Drucker Graduate School of Management

Harshit Rajaiya

Boston College, Carroll School of Management, Department of Finance

Qianqian Yu

Lehigh University

Date Written: March 20, 2020

Abstract

In this article, we review some recent developments in the field of Financial Technology or “FinTech.” We begin with an overview of what FinTech is and why it has become an important growth industry in the financial services area and therefore an important research topic in finance. In the next section, we review some of the academic literature in the FinTech area. In the subsequent section, we characterize the financing of FinTech startups, especially by venture capital firms. In the following section, we characterize innovation by FinTech firms as well as by incumbent financial intermediaries. In the next section, we move on to discuss potential sources of value creation by FinTech start-up firms relative to existing incumbent firms: we conjecture that one source of value creation may arise from FinTech startups being able to provide a superior customer experience relative to incumbent firms in various areas of consumer finance. In the following section, we discuss the regulatory environment facing FinTech firms, in their banking as well as in their financial market activities. In the penultimate section, we analyze the buy-versus-build decision facing firms choosing to enter the FinTech sector, and discuss the trade-offs that may drive such decisions in practice. We conclude with some remarks about the future directions that may be taken by the FinTech industry.

Keywords: FinTech; Financial Innovation; Banking the Unbanked; Venture Capital Finance

JEL Classification: G21, G23, G24, G28

Suggested Citation

Chemmanur, Thomas J. and Imerman, Michael B. and Rajaiya, Harshit and Yu, Qianqian, Recent Developments in the FinTech Industry (March 20, 2020). Forthcoming, Journal of Financial Management, Markets and Institutions, Available at SSRN: https://ssrn.com/abstract=3558163 or http://dx.doi.org/10.2139/ssrn.3558163

Thomas J. Chemmanur (Contact Author)

Boston College - Carroll School of Management ( email )

Finance Department, 436 Fulton Hall
Carroll School of Management, Boston College
Chestnut Hill, MA 02467-3808
United States
617-552-3980 (Phone)
617-552-0431 (Fax)

HOME PAGE: http://https://www2.bc.edu/thomas-chemmanur/

Michael B. Imerman

Claremont Colleges - Peter F. Drucker Graduate School of Management ( email )

The Drucker School of Management
1021 North Dartmouth Avenue
Claremont, CA 91711
United States
909-607-3310 (Phone)

Harshit Rajaiya

Boston College, Carroll School of Management, Department of Finance ( email )

154 A, Fulton Hall, Carroll School of Management
140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States

Qianqian Yu

Lehigh University ( email )

621 Taylor Street
Bethlehem, PA 18015
United States

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