Janos Barberis (PhD Candidate)
LSE Business Review
17 May 2016
Financial Technology (FinTech) has been one of the fastest growing tech sectors during the past two years. Interest in the sector has led banks, investors, regulators and policymakers alike to interact with FinTech start-ups to better understand what drives their success. This has emerged as an on-going process – the difficulty comes from the fact that similarly to the Financial Services industry (FinServ) the FinTech sector is diverse and cannot be reduced to a specific silo or sub-sector (e.g. payments or alternative finance).
It was argued, in The Evolution of FinTech A New Post-Crisis Paradigm, that the FinTech sector reflects more of an evolution than a revolution. Taking a historical approach allows one to appreciate that finance has regularly been using technology to deliver products and services. From an I.T. spending perspective (US$ 195 billion in 2015) compared to FinTech investments (US$ 19 billion in 2015), it’s clear that banks’ current inroads into the sector are mainly exploratory as most expenses still go towards maintaining previous I.T. systems developed in-house as opposed to start-ups.
FinTech is an emerging trend and we are at the start of a longer-term cycle that will deepen the interactions between FinTech and FinServ participants, with the support of governments and regulators. Currently, the trend can be looked at through four different angles... Click here to read the full article.