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The FinTech Industry: Crowdfunding in Context


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This chapter presents how the financial services sector, especially banking, was a driver for ICT development in the last quarter of the twentieth century and early years of this century. But several phenomena happened on technological, social, and financial fronts in the second half of the last decade that led banks to ‘get their eyes off the ball’ and open the window for a whole new industrial sector to emerge, FinTech. This chapter analyses the phenomenon with the objective of answering: Why did FinTech emerge as an industrial sector, independent of banking? How is the FinTech industry organized and where does crowdfunding fit in? The chapter identifies three external forces that acted upon the banking system and created the conditions for the FinTech sector to emerge. It also looks at the FinTech sector from an industrial organization perspective and proposes a framework connecting financial services functionality and technological applications.
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R. Shneor et al. (eds.), Advances in Crowdfunding,
The FinTech Industry: Crowdfunding
e last three decades of the twentieth century witnessed the adoption of
information and communications technology (ICT) by business corpo-
rations at an increasing rate and banks were leaders and trendsetters in
this process. However, this leadership role of banking in the development
of corporate ICT was lost in the second half of the rst decade of this
millennium. is chapter intends to shed light on the process that led to
this. In so doing, it addresses the questions: Why did FinTech emerge as
an industrial sector, independent of banking?
e author is strongly connected to the world of ICT transformation
and of banking as an information intensive industry. He entered the busi-
ness world as a young graduate during the mainframe-based, bespoke
systems age; he then oriented his career towards management consulting,
where he carried out and led technology-enabled business transformation
P. Griths (*)
EM Normandie Business School, Métis Lab, Oxford, UK
e-mail: pgri
projects in the enterprise resource planning (ERP) era and the customer
relationship management (CRM) and e-commerce solutions era; he
replaced legacy core-banking systems by more modern client-server plat-
form ones. On the academic side, he went back to university and enrolled
on a doctoral programme that he researched into strategy-technology
alignment in banks from which he graduated in 2005. He then became a
full time academic and for the last three years has been researching the
industrial organization of the FinTech sector. So, it is from this broad
background that bridges across the practitioner and academic worlds in
banking and technology that he sets out to address the above questions.
e rest of this chapter is organized in the following way. Section
Twentieth Century: ICT Emerging and Evolution” will give an over-
view, based on the author’s professional experience, of the evolution of
ICT in the last three decades of the twentieth century. From the specic
perspective of banks, it will show that the nancial sector in general, and
banking in particular, was a driver of the ICT evolution during that
period, until the mid-2000s. Section “Advent of the Tipping Point: Why
Did Banks Lose Control?” will, based on current literature, identify three
root-causes for banks to have lost control over the ICT agenda in the
nancial sector. In having lost control of the evolution of ICT, Section “A
New Industrial Sector: e Emerging of FinTech” will give a framework
to understand how the FinTech sector is structured based on a classica-
tion of the players according to the functional services they oer and the
types of technology they apply. It will emphasize the role of crowdfund-
ing in this landscape. Section “Discussion” will oer a discussion on the
ndings, and Section “Conclusions” will draw some conclusions.
Twentieth Century: ICT Emerging
e last three decades of the twentieth century witnessed the adoption of
information and communications technology (ICT) by business corpo-
rations at an increasing rate. During the 1970s and 1980s it was large
systems developed and running on mainframe computers, with bespoke
P. Griffiths
applications of narrow functional scope and weak integration with other
functional applications. ICT was essentially about number-crunching
large volumes of at les, initially fed in by perforated cards and later in
the period by magnetic tapes and discs. It was a domain restricted to the
largest corporations, prominent amongst them the big banks, govern-
ment institutions and universities. Systems were all corporate and man-
aged by large IT departments with battalions of in-house programmers,
analysts and systems engineers complemented by professional sta
belonging to the large systems companies (that later called themselves
‘integrators’) such as IBM, Honeywell-Bull, ICL, Unysis. e technology
platforms on which these corporate applications were developed were
proprietary, with no convertibility from one vendor’s platform to another
vendor’s: Client lock-in was the name of the game.
Democratization of ICT and its access to the smaller corporations and
companies came in the mid-to-late 1980s and early 1990s with the
advent of the mini-computer, the table-top personal computer, local area
networks, handheld devices and, very importantly, the relational data-
base. Democratization turned into revolution with the access to, and
popularization of, the Internet.
e until then reigning mainframe computer and its centralized archi-
tecture ceded part of its domain to the distributed client-server architec-
ture. e mainframe did not completely go away as those organizations
who had them tended to keep the mainframe as database server due to its
low cost per transaction for large volumes of transactions.
In parallel with client-server a signicant change in the 1990s was the
advent of the enterprise resource planning (ERP) systems with a new key
player that with time became the dominant player in the corporate appli-
cations world, breaking the until then hegemony of the Anglo-Saxon
companies: SAP from Waldorf, Germany. Being the four founders of
SAP ex-IBM engineers, the rst versions of their ERP ran on mainframes,
but they really took o with their rst client-server version that they
called R/3. ere were competing providers such as Oracle (with its
Financials), JDEdwards, and PeopleSoft. is wave responded to a sig-
nicant change in philosophy and the name of the game now had two
dimensions: (a) it was all about packaged solutions, that is solutions that
did not need code developed from scratch for each corporation, but that
11 The FinTech Industry: Crowdfunding in Context
would be standard with the possibility of conguring parameters for lim-
ited adaptation to each company; and (b) integration was dominant over
best-of-breed solutions, that is that now it was more important to have
integration across functional applications than to have the best individual
and isolated application.
Integrated packaged solutions brought with them another signicant
change: the concept of ‘leading practices’ in business processes. While the
bespoke systems of the mainframe era were modelled in line with the
processes of each company, in the ERP era the company would adapt its
processes to the leading practices in-built in the solution. e implica-
tions of this is that the implementation of an ERP system would lead to
signicant changes in processes that, in turn, radically changed people’s
jobs. us, change management became an important component of
implementation projects, with a focus on stakeholder management and
training of people in entire processes, not just their specic task in a large
process as was the case before.
Another change that came with the ERP wave is how projects were
organized. e conguration of a systems project team was no longer a
team of highly technical analysts and programmers, but people who were
versed in business processes. e bulk of the work was not in coding but
in parameter conguration and change management activities. So, the
project teams were integrated mainly by non-technical systems people.
ERP projects were not referred to as systems or technology projects any-
more, but as business transformation projects enabled by technology.
Ripples of ERP in 1991–1993 became waves in 1994–1998 and
turned into tsunamis approaching 2000 and the generalized policy of
implementing ‘vanilla’ ERPs to sort the Y2K problem (this term was
coined by Gartner Group and refers to the fact that the early mainframe
systems had only two-digits for the year in dates, so it was suspected that
they would all fail with the advent of the new millennium). With the
advent and establishment of ERPs, came the reduction in the size of the
IT departments in corporations. In eect, what adopting and imple-
menting ERP meant was that the development of new functionalities to
adapt to changes in the legal and tax environment, or to the need for new
functionalities, was outsourced to the ERP vendors.
P. Griffiths
Of course, ERP were not the panacea that appears at rst sight.
Signicant amount of coding to ensure integration with legacy systems or
vertical industry-specic applications were still necessary. Although ‘big
bang’ projects were highly promoted, common sense and risk manage-
ment led to many projects being piloted and phased in, which meant that
temporary interfaces had to be developed. And although the ERP ven-
dors did produce their solutions with specic avours for dierent indus-
tries, this was still not enough and corporations demanded having some
of their vertical functionality developed outside of the ERP. For example,
SAP achieved a highly competent footprint in the consumer packaged
goods (CPG) and in the utilities industries, but never managed to pro-
duce convincing solutions for the core-banking functionalities despite
having invested heavily in its solution for that sector. In other words,
coding and development eort for integration did not entirely go away.
After the ERP binge running up to Y2K came the hangover in the
form of a relative slowdown in the ERP market, but that did not stop the
corporate-systems business as a whole. At around the time that ERP
slowed down e-commerce and client relationship management (CRM)
solutions emerged with force. E-commerce was the hottest product but it
was severely impacted by 9/11 and the implosion of, recovering
afterwards but growing at a more moderate pace.
With the slowdown of the ERP market and of the global economy
after 9/11, came a consolidation within the corporate ICT solutions
industry. SAP expanded its functionality into CRM, e-commerce and
business intelligence through internal developments but later broke this
tradition by entering the acquisitions path. Oracle, on the other hand,
acquired PeopleSoft, Siebel (the leading CRM provider), JDEdwards,
and many others, with signicant pains in converting all these indepen-
dent applications into a coherent, seamless oering to its clients. Oracle
also moved into the hardware space by acquiring SUN Microsystems and
SAP moved into Oracle’s traditional realm, the database layer, through
acquisition, too. Oracle articulated the concept of ‘stack’, from hardware
to enterprise application, through operating systems, databases, integra-
tion layers and others. Oracle publicized itself as being able to oer the
whole stack or just some of the layers.
11 The FinTech Industry: Crowdfunding in Context
e strong narrative of ERP vendors in terms of the importance of
integration started weakening with the advent of intelligent middleware
communications platforms that made unnecessary the dreaded point-to-
point, or one-to-one, interface development. e nightmarish spaghetti-
style interfaces that haunted CIOs and kept them awake at night, could
now be substituted by simpler to understand middleware layers into
which applications could easily be plugged in. Another highly signicant
concept that was materializing and coming of age at the turn of the cen-
tury was the API (application programming interface—term that was
coined decades before by Cotton and Greatorex 1968), a set of subrou-
tine denitions, communications protocols and tools for building soft-
ware. As will be seen in Section “Discussion”, APIs would play an
important role in the FinTech world.
e prior paragraphs give an overview of how corporate ICT in gen-
eral developed from the 1970s to the early 2000s. e eect on business
transformation of the adoption of ICT was highly signicant, but
nowhere more than in banking. Banking is an information-intensive
industry, by which it is meant that dierentiation comes exclusively from
their intellectual capital and information or, in other words, their people,
processes, relationships, and technology (Clayton and Waldron 2003;
Griths 2003, 2005; McKeen and Smith 1996; OECD 2003,
Driven by this dependence on information, banks played very much of
a leading role in adoption and development of ICT, and the trajectory
they followed diered from the mainstream CPG, retail, industrial prod-
ucts, and utilities corporations. Banks were clearly ahead of the pack in
the early phase of that period, that of the bespoke systems running on
mainframe computers. ey were so heavily vested in those technologies
and had such high numbers of transactions compared to the other indus-
tries, that they could not make the business case for moving to client-
server. is, together with the fact that banking processes and applications
had become highly sophisticated and business critical at an extreme, dis-
incentivized the ERP vendors to develop vertical solutions for banking in
the early days of ERP. Eventually SAP did propose a banking-solution,
but its adoption was disappointingly slow and hardly ever with an end-
to- end footprint but limited to fragmented pieces of the business.
P. Griffiths
Essentially, the largest banks are trapped, to this day, in their legacy
Indeed, banks have adopted standard packaged solutions in many
parts of their business, particularly the highly technical middle oce, but
the back oce remains on the legacy systems. at is not to say that there
have not been any client-server solutions for banks, but the more success-
ful ones have been developed by specialized companies and not the lead-
ing ERP vendors. For example, Citi co-developed a client-server core
banking system with a company called i-Flex in India, to implement in
its smaller operations around the world (it later divested from i-Flex and
a few years later i-Flex was absorbed by Oracle). So, essentially, banks did
not participate in the ERP part of the prior narrative.
Notwithstanding their attachment to the legacy mainframe systems,
banks did make some memorable breakthroughs, of which the ATM is a
notable example. e generalization of ATMs in the 1980s enabled banks
to give 24×7 service and signicantly lower their banking transaction
costs. is led the self-service kiosk technology that is still in the process
of being adopted by other corporations in most other industries and
e ATM was followed by the waves of phone banking, home bank-
ing, and Internet banking. ey all had in common pushing their clients
out of the branch oce and lowering further the costs of banking trans-
actions and brought with them the need for omni-channel, that is the
need to show the same face to the client independently of what channel
the client chose to interact with her bank. So, the big banks that had
departed from mainstream in the ERP age, took leadership again in the
CRM phase. With this came the transformation of the banking branch
oce, that until the 1990s was a mini-bank in its own right with all func-
tionalities in the branch. From the turn of the century banks took all the
back-oce and middle-oce functionalities (e.g., bookkeeping and
accounting, credit scoring, loan origination) from the branch to the head
oce, and most of the transactional activity out of the branch to remote
channels. e branch oce became far smaller and focused on value-
added client services.
is narrative brings us to the mid-2000s when a tipping-point with
several fronts was reached in the ICT world as will be developed in later
11 The FinTech Industry: Crowdfunding in Context
sections. As has briey been outlined in this section, ICT in business and
government went from a rarity in the 1970s to complete inltration and
dissemination in the early 2000s. What this story is telling us is that dur-
ing this period of study the world, or at least what we generally refer to as
the Western world, almost unperceptively migrated from an industrial
economy of predominantly tangible assets, to a knowledge one where
intangible ones overwhelmingly predominate over the tangible. is is a
new era where the application of ICT radically changed, and where banks
lost their grip on its development.
e importance that ICT took on in the business world in general, but
especially so in such an information-intensive sector as is banking, makes
the research question stated in Section “Introduction” of the utmost rel-
evance both to the practitioner and to the academic world. e process
through which this happened is described in the next section.
Advent oftheTipping Point: Why Did Banks
Lose Control?
A thorough review of the literature on the emerging of the FinTech sector
was carried out—the emphasis was put on academic papers from 2012
onwards, as it is thought that before then would be too close to the events
for clarity and that it has been found by Zavolokina etal. (2016, p.9, g.
1) that article publication numbers started growing that year. Based on
that search this section identies three root-causes that, although unre-
lated to each other, happened to coincide in time and lead banks to have
lost control over the ICT agenda in the nancial sector. e narrative in
Section “Twentieth Century: ICT Emerging and Evolution” brings us to
the mid-2000s and it announces that around that time several major
events happened in the banking, the ICT world and society in general
that led to the emerging of a new industrial sector that we nowadays call
FinTech as a contraction of nancial technology. e Basel Committee
on Banking Supervision (BCBS) denes FinTech quite broadly as
P. Griffiths
[t]echnologically enabled nancial innovation that could result in new business
models, applications, processes or products with an associated material eect on
nancial markets and institutions and the provision of nancial services.
(Claessens etal. 2018; Palazzeschi 2018)
So for BCBS FinTech is a form of innovation, but a very broad one at
that, as it includes business models, applications, processes, or products.
Doreitner et al. (2017) while admitting that there is no universally
accepted denition of FinTech, take a more cautious approach and refrain
from proposing a denition based on that while accepting that most
companies in the FinTech sector share certain features, there are always
enough exceptions to render them inadequate for producing a general
denition. ey opt to give a summary description of the dierent ser-
vice domains of FinTechs, that they group in four: (a) nancing, (b) asset
management, (c) payments (in which they include cryptocurrencies),
and (d) other FinTechs. e latter includes a hotchpotch of things such
as insurance; search engines and comparison sites; technology, IT and
infrastructure; plus ‘other FinTechs’. Both approaches have limitation:
BCBS stay at a conceptual level, and Doreitner etal. (2017) are far too
broad and encompassing, which unsurprisingly gives place to so many
In this chapter we will overcome those problems and propose and
adopt a denition. We will overcome the BCBS limitation by dening
FinTech as a company/organization, and we will narrow the service oer-
ing domain. We will limit the services to banking services, that is services
where the core competence is managing credit risk, market risk, or bank-
ing operational risk. So, by FinTech in this chapter we understand not the
technology itself, but a digital technology-enabled entrepreneurial initiative
that oers services to clients that would traditionally be considered within the
domain of banks; or that are an innovative service in the natural business
domain of banks; or that help banks develop their back-oce processes.
So, returning to the research question—Why did FinTech emerge as an
industrial sector, independent of banking?—and to focus the mind we will
address it by responding to four subquestions:
11 The FinTech Industry: Crowdfunding in Context
What caused banks to lose leadership in the development of corporate
ICT systems?
What enabled the FinTech sector to emerge with such vitality in a
business dominated by behemoths?
What encouraged entrepreneurs to move into the service domain tra-
ditionally served by banks?
How is the FinTech industry organized and where does crowdfund-
ing t in?
Arner etal. (2017) divide the co-evolution of nance and technology
into three stages, namely:
(a) e analogous age prior to the late twentieth century,
(b) the digitalization era that goes from the late twentieth century
until 2008, and
(c) the diverging era with the advent of new nancial providers based on
advanced technologies.
As is mostly the case, there is not a single cause for the advent of the
tipping point that moved the evolution of nance and technology into
the diverging era. is research identies three unrelated causes that hap-
pened in the 2007–2008 point in time; it is quite probable that none of
these causes alone would have caused such a disruption, but their coinci-
dence in time enabled them to feed into each other and cause havoc in
the banking industry. e rst is the global nancial crisis known as the
Great Recession that is generally accepted as having been caused by the
banking system and its greed in the mortgage segment. e second is
several nearly simultaneous major breakthroughs in the technology sector
that led to a drastic drop in entry barriers to the banking services sector.
And nally, signicant social changes with the coming of age of the mil-
lennial generation and their growing role in the business world and in
relationship to banking. e rest of this section will esh out these
three causes.
P. Griffiths
The Effect oftheGreat Recession
e 2007–2008 recession put banks in the US, the UK, and several
countries on the European continent at the brink of collapse leading to
systemic failure which, in turn, led banking authorities in those markets
to bail them out with public funds. Subsequent investigation into the
events detected that banks accelerated their growth by taking on excessive
risk that they partially transferred to other organizations through nan-
cial engineering devises concocted by their investment banking arms. In
conjunction with this, the population became extremely critical of banks
and there was general distrust in these institutions. ese three factors led
national authorities to react, and in many cases over-react, with the result
of far more stringent banking regulations that caused great regulatory
challenges to the banks (European Central Bank 2016; Haddad and
Hornuf 2019; Kotarba 2016). ese more stringent regulations worked
in two directions (see Fig.11.1).
e rst was in the sense of demanding banks to signicantly increase
their regulatory capital so that never again would they need to be rescued
with public money. Because as a result of the crisis capital was costly to
acquire by banks, they reacted by reducing the denominator of the capital
adequacy ratio, that is by reducing their exposure to risk. ey did this by
pruning those clients of higher-risk prole, and by letting go the less
2007/8 Crisis
Bail outs w/public money
Distrust in Banks
Emerged that banks
accelerated growth @
expense of risk
More stringent
Increase Capital
Cost reduction
/pruning of clients
Let go least
profitable operations
Client data
Client data security
Data available to
third party providers
Regulatory challenge
Fig. 11.1 The effect of the 2007–2008 crisis
11 The FinTech Industry: Crowdfunding in Context
protable operations (e.g., certain products and geographic markets).
e resulting reduction in scale in turn led them to embark on cost
reduction initiatives (European Central Bank 2016; Kotarba 2016).
e other way in which more stringent regulations worked was related
to client data. On the one hand the authorities put emphasis on client
data security, and on the other hand bank regulators demanded that cli-
ent data be made available to third-party providers in order to break the
oligopoly of incumbent banks and increase competition in banking ser-
vice (European Commission 2014, 2015; Tammas-Hastings 2017).
The Effect ofMajor Technological Breakthroughs
At the time the banks focused all their senses inside to cope with the regu-
latory changes that came because of the crisis, three key technology phe-
nomena were happening. e rst is incremental and refers to the
continuing of Moore’s law that translated into lower prices and thus giv-
ing more and more people access to devices (Lundstrom 2003;
Waldrop 2016).
e second was the swift coming of age of Cloud computing with a
change in mind-frame in the business community in the sense that mov-
ing from on-premise applications to cloud ones did not bring extra risks
in terms of data security, and that adopting an on-demand model for
technology appropriation had signicant operational and balance sheet
advantages (Ambrust etal. 2010; Rimal etal. 2009).
e third phenomenon was surely disruptive and is the advent of the
rst i-Phone and from there all the forms of smartphones that came after
it. Moreover, the smartphone had the eect of enabling the development
of social networks and, thus, the side eect of the advent of the data tsu-
nami usually understated as Big Data (Barkhuus and Polichar 2011; Lee
and Shin 2018; Smolan and Erwitt 2012).
ese three phenomena had eect on what was to be the emerging
FinTech sector, and on incumbent banks. e eects on these two groups
initially developed quite independently of each other, but as will be seen
opportunities for cross-fertilization emerged in later stages (EY 2018,
p.28; Gai etal. 2018; Lee and Shin 2018).
P. Griffiths
Looking at the FinTech sector rst, it is found that the conjunction of
the three technological phenomena had the eect of both lowering entry
barriers for small new players to oer components of nancial services
and giving many more people access to devices and thus become poten-
tial clients for these new entrants to the nancial services market oering.
As opposed to entrepreneurial technology-based start-ups in other sec-
tors, in general these new players in the FinTech sector did not have cash
to burn at outrageous rates, so they developed two characteristics. On the
one hand they are limited in the scope of their service, and on the other
they take incremental opportunities in relatively mature markets that
oer them quick cash-ow. ese two characteristics translate into them
focusing on niche but protable parts of the incumbent banks’ business,
causing strong reaction from the banks who denounce them as avoiding
regulations to take the icing of their cake (Lacasse etal. 2016).
e conjunction of taking the more protable pieces of the banks’
business and being able to serve many more people who were then pos-
sessing digital devices, converted into great opportunities for the emerg-
ing FinTechs. But their increasing visibility and the protests of the
incumbent bankers led banking regulators to observe this new sector and
extend at least part of the regulations to them.
From the perspective of incumbent banks, these three technological
phenomena and their derivations (i.e., social networks and Big Data) had
a signicant impact on their own operations. Bank clients were demand-
ing new channels such as mobile and generating massive data ows that
oered signicant potential if properly exploited. However, they also
posed unsurmountable challenges in terms of cybersecurity, of data ana-
lytics issues and of data visualization complexities to incumbent banks
that were constrained by their legacy systems as described above. is led
the banks to start seeing FinTechs as potential enablers for their own
processes in this new era of nancial services (EY 2018; Gai etal. 2018).
Particularly on continental Europe where FinTechs were being funded
more by banks than venture capital (Lee and Shin 2018), risk manage-
ment challenges emerged quickly and were addressed by regulators which
erected barriers for FinTechs to operate as independent client-facing ser-
vice providers, but opened opportunities in the banks that were funding
them. So, in general, the antagonistic atmosphere between incumbent
11 The FinTech Industry: Crowdfunding in Context
banks and FinTechs that prevailed in the early post-2008 years gave way
to a more collaborative spirit between both sectors. is eect of the
technological breakthroughs is depicted graphically in Fig.11.2.
The Effect ofSocial Changes
At the time of the nancial crisis and the advent of the technological
phenomena described above, the business world was going through major
social transformations in terms of power as depicted by Naim (2013), of
the changes in mindset that came with Generation Y taking a growing
role in the workforce and of the advent of social entrepreneurs and
e Generation Y are avid adopters of mobile banking as long as it is
easy to use and it poses no excessive risks in terms of data security. Both
these conditions were hard to meet for incumbent bankers due to their
legacy platforms, but straight forward for the FinTechs. On the other
hand, due to the capital constraints mentioned above banks put eort
into developing CRM processes and solutions that enabled them to
Moore’s law ->
more devices
Falling entry
Digital -
multichannel Omni-channel
Strengthen relationship w/
valued clients
Access to more
extending to
Focused scope
Quick cash flow
Low investment
Risk management
More stringent
Fin. business
processes enabled
by mobile
w/massive data
Cybersecurity issues
Data analytic issues
Data visualisation
play facilitator
More finance by
banks than VC
Fig. 11.2 The effect of major technological breakthroughs on FinTech and banks
P. Griffiths
strengthen their relationship with their ‘valued’ (i.e., the older more au-
ent) customers, and let go their less protable and higher risk ones, as the
Generation Y were seen to be. is opened a segment of great potential
to the FinTechs (Boonsiritomachai and Pitchayadejanant 2017; Lee and
Shin 2018).
In parallel with the above and especially in the Anglo-Saxon world,
there emerged a new breed of what were to be called social entrepreneurs
whose projects did not pursue a predominantly nancial objective and
thus were unt to be assessed in terms of the banks’ traditional credit
scoring criteria. is new breed of entrepreneurs resort to alternative
nance sources such as crowdfunding so became another market oppor-
tunity for FinTechs (Kotarba 2016).
On continental Europe it was found that while people do not trust
banks much more than in the Anglo-Saxon world, they have less incen-
tive to leave their banks and trust FinTechs even less than banks. So that
becomes a barrier for FinTechs on the continent.
e eects of social changes are depicted and summarized in Fig.11.3.
As a result of these three external forces (i.e., the Great Recession and
subsequent regulatory changes, the technology breakthroughs, and the
social changes) acting nearly simultaneously, banks lost control of the
Social changes
M, M, M
GEnY become active
Social entrepreneurs
GenY avid mobile banking
consumers as long as:
Ease of use
Lose non-profitable
Security does
not pose
excessive risk
Both are
problematic for
Banks develop CRM
Strengthen relationship w/
valued clients
Projects w/ social
impact (esp. A-S
Don’t fit bank credit
Resort to
People don’t trust
banks (Continent)
Plus no incentive to
leave banks
Trust FinTechs even
less than banks
Fig. 11.3 Effects of social changes on banks and FinTech
11 The FinTech Industry: Crowdfunding in Context
evolution of ICT and left the door wide open for technology entrepre-
neurs to set up independently and eat away at the icing of their cake. e
next section gives an overview of the industrial organization of this
new sector.
A New Industrial Sector: TheEmerging
As mentioned above the FinTech sector is quite dierent from other
technology- driven entrepreneurial or start-up sectors in the sense that it
did not access massive funding and therefore its companies had to be
focused in terms of service scope, and it did not produce great new mar-
kets but rather served extant markets that were until then poorly or
underserved by banks. While, due to the latter, initially the relationship
between traditional banks and FinTechs was notoriously antagonistic,
with the passage of time banks realized that their constraints from legacy
systems would obstruct them entering the digital era, so started to see
FinTechs as possible collaborators to help overcome those barriers. is is
particularly so in the data-oriented, security and privacy, and compliance
spaces (Duan and Da 2012; Gai etal. 2018; Roumani etal. 2016).
Growth of the FinTech sector in terms of investment is literally expo-
nential, going from $1.8 billion in 2010 to $19 billion in 2015 according
to some sources (Citi 2016 cited by Leong etal. 2017) or from $1.5 bil-
lion in 2010 to $22 billion in 2015 according to others (Shuttlewood
etal. 2016) and there are indications of steep growth in 2016 (Lee and
Shin 2018). Within this context, seven banking-service areas emerge as
the domains where FinTechs carry out their oering. ese are: alterna-
tive nance, transactions, investment markets, banking back oce,
nancial inclusion, cryptocurrencies, and business partner integration.
Alternative nance refers to services that supersede the traditional lending
function of banks. ey include personal nance, consumer nance, small
and medium enterprise lending, and prominent in this category is crowd-
funding in its four formats: reward-based, donation-based, equity-based and
loan-based. Examples of reward-based crowdfunding companies include
Kickstarter, Indiegogo, CrowdFunder, and RocketHub; of donation-based
P. Griffiths
are GoFundMe, GiveForward, and FirstGiving; of equity-based crowdfund-
ing companies are AngelList, Early Shares, and Crowdcube; nally, of loan-
based crowdfunding companies are Funding Circle and Cumplo (Lee and
Shin 2018; Shneor and Munim 2019 citing Ziegler etal. 2018).
Transactions refers to one of the most active areas of FinTech as are pay-
ments and remittances. ese two areas were traditionally controlled by
banks but are now giving way—in the case of payments by oering layers
of service overlaying those of traditional banks and biting away at parts of
the fees that banks charge in this space. In the case of remittances, it is
about oering channels that circumvent bank services and fees altogether
(Lee and Shin 2018).
Investment markets include services such as equity nancing, retail
investment, institutional investment, fund management and crowdfund-
ing as an opportunity for investing (Lee and Shin 2018; Shneor and
Munim 2019).
Banking back oce is about FinTechs supplying banks agile services
such as banking infrastructure, nancial security services, identity veri-
cation, compliance, business tools, nancial research, and energy e-
ciency in regard to achieving green nance. Prominent amongst these are
RegTech, a avour of FinTech aimed at helping banks comply with the
demands of regulators and assist banking supervisors in keeping track of
the banks under their watch (Gai etal. 2018; Puschmann 2017; Tammas-
Hastings 2017).
Financial inclusion means reaching out to the unbanked and oering
nancial services at an extremely low cost and ll a gap that banks have
never tackled, with well thought through and low-cost service oerings;
micro-nance is prominent amongst this category (Lacasse etal. 2016).
Cryptocurrencies emerged as an initiative to circumvent banks alto-
gether in the payments space but have not materialized as such; up to
now they have served more as investment than payment instruments, and
with doubtful outcomes at that. However, the distributed ledger technol-
ogy that underlies them could be of application in many other areas such
as trading and ‘smart contracts’ (Chen 2018; Hawlitschek etal. 2018).
Business partner integration is about FinTech oering services that
bridge across the traditional oerings of banks and of other sectors with
large business-to-consumer operations, such as telecommunications,
11 The FinTech Industry: Crowdfunding in Context
retailers and airlines (Kumar etal. 2006; Rosingh et al. 2001; Schmitt
and Gautam 2016).
To deliver these services FinTechs will apply one or multiple emerging
technologies such as the DANCE acronym (Data, Algorithm, Networks,
Cloud, Exponential) proposed by McAfee and Brynjolfsson (2017) and
others including mobile, distributed ledgers, bioinformatics and behav-
ioural biometrics, robots, all-in-one smartcards, and others.
It is helpful to understand the industry to present this in the form of a
double entry table and map the FinTech companies onto the cells of this
matrix (see Table11.1).
e rest of the chapters in this book will develop the contents that will
t into the columns under alternative nance and investment markets of
this framework. ose are the two service domains in the FinTech I/O
framework where crowdfunding plays a key role. In the rst case in its
funding role, and in the second in its investment opportunities role. Just
as an example of how this works, Table11.2 reproduces the contents of
one cell in this framework: e cell corresponding to Alternative Finance
as a service domain, and data analytics and the exploiting of Big Data as
a predominant enabling technology for those services.
It should be noted that in the Table11.2 there are the four kinds of
crowdfunding companies described above, but there are also other com-
panies such as Touch Bank, which is a retail bank, or Retail Capital,
which lends through partnership with banks, and do not conform to the
crowdfunding principles but nevertheless are FinTechs in the alternative
nance space.
With all this information in mind, the next section will extract some
insights into how the FinTech sector emerged and evolved, and it will
address the research question.
Many interesting insights emerge from this analysis of the FinTech sector,
of which four will be mentioned in this section. e rst is that techno-
logical breakthroughs are all important but are only a necessary but not a
sucient condition for the advent of FinTech. Cultural-based inuences
P. Griffiths
Table 11.1 The FinTech I/O framework
Back Office:
Fin. Security;
Business tools;
out: Fees
Payment or
Data: Exploiting ‘Big
Algorithms: AI and
Cognitive Computing
Networks: 5G, faster
data accumulation
Cloud: Lower entry
barriers; local vs central
improvement in digital
h/w; Moore’s law effect
Bioinformatics &
behavioural biometrics
Distributed Ledgers
All-in-One smartcards
VR, interactive & AR
Table 11.2 Sample from the repository of FinTechs
name Country Activity Notes Website
Lendingkart India Business loan
for small
Co-lending with
KredX India Business loan
for small- and
for an
Company (NBFC)
Wefinance USA Lending to
particular by
funding from
Upstart USA Bring together
borrowers and
Calculate credit
score based on
SoFi USA P2P lending for
USA Loans and
Focus on
C2fo UK Short-term
Zopa UK P2P lending Founded in 2005,
one of the first
sites directly
borrowers and
savers, cutting
out financial
institutions from
the lending
process (NYT)
Touch bank Russia Retail banking Online credits,
loans, card,
P. Griffiths
have also been essential and probably the most important was the
Millennium generation taking their place in the labour and consumer
markets. e incumbent bankers disregarded them to focus on more
auent baby-boomers, particularly in asset management services. What
the banks did not anticipate is that Millennials are not individually au-
ent yet but that they are on the way to being the largest demographic
group and as a group they hold over $1 trillion in wealth (Pitchbook).2
is group is not interested in investing in active management funds and
having costly nancial advisors; they want passive management funds
that can be monitored through their mobile phone. What is even of more
impact is that the older generations learn to trust technologies that are
embraced by the Millennials, so disregarding this generation exposes
them to losing their senior relations.
A second insight is that according to some sources of the seven service
categories of FinTechs, the most highly funded (Venture Scanner 2019)
are lending to consumers and to businesses, (meaning small- and
medium-sized enterprises, SMEs). Most of this is based on the peer-to-
peer business model thus constructing links between borrowers and
investors. Some of the FinTechs in this space are co-lending with banks
and loan criteria vary across companies, but most want to avoid the clas-
sic credit scoring criterion in favour of seeking the highest potential bor-
rowers and the most interesting personal projects. Based on keeping a low
operating cost, these FinTechs can oer lower rates to borrowers and
higher returns to lenders or investors. is insight is saying that crowd-
funding is in a highly relevant position within FinTechs.
Table 11.2 (continued)
name Country Activity Notes Website
Smart asset USA Advices
database (find
best credit,
loan solution
among all
in the market
Tax, retirement,
bank, account
comparison tool
Russia Micro lending Asset-based loans,
unsecure loans
11 The FinTech Industry: Crowdfunding in Context
e third insight, as anticipated, is that banks have departed from their
original antagonistic view of FinTechs to start nding potential in them
as start-up venture opportunities and, more importantly, as resources for
internal projects to make their operation more responsive, secure, com-
pliant and ecient (EY 2018; Lee and Shin 2018). Typically, they look at
FinTechs to help them reduce operational costs, provide more personal-
ized services through data, and respond to customer behaviour changes.
As a result of this, FinTechs have extended their role from retail customer
facing to the back oce or middle oce of banks. Although it is men-
tioned above that alternative lending is the most funded domain, this can
be contested based on the massive resources that are increasingly going
into security and privacy initiatives (Gai etal. (2018), citing Gartner, says
that the cybersecurity market reached $75 billion in 2015 and is pro-
jected to reach $170 billion by 2020; a signicant share of this will go to
nancial services).
Finally, it has been said that in the UK, following the 2007–2008
nancial crisis and the tarnished image with which established banks
came out of it, the regulators proactively promoted FinTechs in the hope
that challenger banks would emerge from them. And in eect this did
happen as several challenger banks have emerged (e.g., Monzo, Metro)
but their real impact on the market concentration has been marginal with
the ve big banks still rmly in control. What is even more disappointing
is that some of these challenger banks have had to have their business
models closely scrutinized by the banking supervisors under suspicion of
adopting aggressive lending practices and even manipulating of balance
sheets to avoid increased demand for fresh regulatory capital (FT 2019).
It is hoped that the implementation of open banking supported by regu-
lations such as Payment Services Directive 2 (PSD2) will enable FinTechs
and the most agile and forward-looking mainstream banks to oer more
API-enabled services and thus change the oligopolistic structure of the
banking business. Traditional banks will not go away but they will most
likely become a component of a more fragmented industry in the form of
a network of hyperspecialists (Malone etal. 2011).
is evolution of the evolving relationship of banks and FinTechs is
summarized in Fig.11.4.
P. Griffiths
So, returning to the research question, Why did FinTechs emerge as an
industrial sector, independent of banking? A combination of factors hap-
pening nearly simultaneously led banks to get distracted from the trans-
formations that were happening around them. Just as the banks were
looking inside their own organization to deal with the severe regulatory
changes being imposed upon them as a result of the Great Recession,
bankers did not perceive the importance that new technologies such as
the smartphone were having, nor did they understand the cultural
changes that were starting to happen with the coming of age of Gen-Y.
e eect of the smartphone and thus accessibility to devices of a mass
market of relatively low income individuals, combined with the lowering
of barriers to entry into the banking business of agile entrepreneurs that
came with the maturing of cloud computing, enabled FinTech compa-
nies to roar into activity.
What encouraged entrepreneurs to move into the multiple banking
services domains was the fact that they could detect a great number of
underserved banking customers, with a young mindset, to whom they
could approach with a narrow service oering driven by technology. at
the oering was narrow meant that investment in developing application
was relatively low; and the fact that the market was already there meant
that cash ow would start coming in quickly. e combination of these
Financial Crisis
& Stringent
Generation Y
and Social
Advent of
Open Banking
Crippled in
Can’t Change
the World
FinTechs Emerge
Banks Lose Sight of
Banking and
Fig. 11.4 Evolution of the relationship between banks and FinTechs
11 The FinTech Industry: Crowdfunding in Context
two factors meant that the amount of working capital required was rela-
tively low.
e fact that the FinTech companies developed relatively focused ser-
vice oerings within a far reaching service industry as is banking, and
that their services are enabled by a large spectrum of technologies that
either emerged or matured in the second half of the last decade when
this sector was emerging, has led the FinTech sector to encompass a
large number of companies with quite dierent congurations. e
framework presented in Table11.1 as a double-entry table, with seven
service-oering domains in one dimension, and over ten technology cat-
egories in the other, helps to understand how the sector is organized and
where each company plays.
In summary this research has found that, distracted by the 2007–2008
crisis and its immediate regulatory changes, the banking industry lost
sight of the technological breakthroughs and social changes that were
happening around it. As a result, after decades of having been a driver
and leader for technological change, the industry left windows wide open
for nimble companies based on ground-breaking technologies to emerge
and ‘eat its lunch’.
It is extraordinary that in such a closely regulated industry as banking,
these FinTech entrepreneurs could have found gaps in regulations to eat
away at some of the most protable icing on the banking industry’s cake.
It is also extraordinary that in such a short period of time FinTechs could
open into so many dierent business domains, enabled by the emerging of
such an unprecedented number of dierent game-changing technologies.
e FinTechs managed this feat with little capital in comparison with
the deep pockets of the institutions they were outpacing. ey achieved
this precisely by focusing on niches where the market was already there
and waiting for a solution. So, in a way, it was more a pull by social
changes than a push by the FinTechs (this is quite dierent from other
areas of technology-based entrepreneurship where the pioneers created a
P. Griffiths
market). However, FinTechs should not become complacent as regula-
tion is creeping in. Approximately one-third of the FinTech business in
the Eurozone is not regulated, but going forward, FinTechs should count
on the fact that banking regulations will move further into their space.
Crowdfunding and other forms of alternative nance occupy a posi-
tion of relevance within the FinTech sector and together have the greatest
fraction of investment as compared to the other six business domains
included in the FinTech industrial organization framework. Clearly
banks have great diculty in nancing the SME segment, where its tra-
ditional credit scoring techniques are not appropriate. ere is, thus, a
promising opportunity for crowdfunding to grow in this space.
Banks have found it hard to keep up as selecting a new technology that
will drive its processes is no minor decision for a bank and in times when
so many technologies are emerging, it is hard to predict which will be the
winning ones. is is not a level eld: Clearly banks as incumbents have
far more to lose than FinTechs so the question we need to ask ourselves is
this: Do extant strategy-technology alignment models apply to banks in
times of so much disruption? Banks need to address this issue.
is review of the FinTech sector as a framework to give context to the
theme of crowdfunding that is the focus of the rest of this book, is neces-
sarily generic and bridges across the dierent markets. But clearly the
process of emerging of the FinTech sector and the evolution of its rela-
tionship to banks, as synthesized in the process described in Fig.11.4,
will change from market to market. As a result of the stage of economic
development, the regulatory environment, the quality of the technologi-
cal infrastructure, the dierent attitudes towards the nancial sector, and
many others, the FinTech sector has evolved dierently in each market.
ere is scope to do comparative analyses of this evolution between mar-
kets and thus arrive at a more granular knowledge on its evolution.
Finally, another question for future research is why, despite the advent
of the FinTech sector with all its diverse set of players, has the market
structure in terms of market control by a small number of traditional
players, remained essentially unchanged. Will open banking be the
answer to this problem?
11 The FinTech Industry: Crowdfunding in Context
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P. Griffiths
... Bashayreh and Wadi 8 Belouafi, 6 Chinnasamy et al., 7 Griffiths, 109 Imerman and Fabozzi, 110 Mitra and Karathanasopoulos, 111 Awotunde et al. 112 , Miwa and Matsui 113 , Mohamed et al. 114 Anand and Mantrala 115 Li et al., 116 Puschmann, 117 Haddad and Hornuf 118 ...
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Globally, with the maturity of information technology, society is now in the information age, magnifying the significance of integrating innovative applications in different financial and other regulatory arenas. The emergence of financial technology (FinTech) based applications has transformed the traditional banking and regulatory systems and enhanced customer satisfaction by providing a balanced environment for protecting its customers from risky behavior or other potential disruptions. Besides these critical applications of FinTech in the financial industry, it is not developed in the Gulf Cooperation Council (GCC) region as in China, United States, and other developed countries. In order to bridge the gaps in the extant by identifying the critical factors involved, this research work presents a systematic analysis of the available literature reported during the period ranging from 2016 to 2021. This systematic mapping of the extant was performed by selecting five different research questions. The key objectives of this systematic research work are, (1) To identify the barriers that restrict the rise of FinTech in the GCC region, (2) Analyze the behavior of different communities regarding the adaptation of FinTech by evaluating the case studies reported, (3) the impacts of FinTech on different communities in the GCC region. (4) The findings of this research work will not only help the state development bodies by encouraging its stakeholders to use FinTech-driven applications in banking, markets, etc. but it will also help the people in maintaining long-term connection with the Ministries of Foreign Affairs, the Dutch regulators, Economic Affairs, the Dutch Central Bank (DNB), as well as with the Authority on Financial Markets (AFM), and (5) this study work will present new research directions for the research community to explore in the near future.
... Financial democracy is at the heart of new forms of entrepreneurial finance which are easily accessible on digital platforms. Underpinning this reality are the advancements in information and communication technologies which have simplified the interaction between investors and entrepreneurs (Griffiths, 2020;Kallio and Vuola, 2020). According to Fisch et al. (2020), financial democracy in entrepreneurial finance is the creation of equal access to financial resources for groups which are underrepresented in the sector. ...
Purpose The purpose of this study is to review the literature at the intersection of crowdfunding and gender, while examining the extent to which crowdfunding has enhanced female financial inclusion and participation. Design/methodology/approach A systematic literature review was conducted across 47 studies from 2011 to April 2021. Findings Most studies suggest that the likelihood of success or failure of female-led campaigns depends on external factors associated with opportunities. The study points to a general trend where although female participation has not achieved its full potential, it is greater than in other channels, while enjoying higher chances of success for female fundraisers. The study highlights gaps in the literature and the associated opportunities for future research emerging from them. Originality/value This study is the first attempt to summarise and sensitise the literature on crowdfunding and gender. The study highlights the importance of analysing the impact of context on the conceptualisation of gender in alternative finance.
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У межах статті авторами розглядаються процеси трансформації міжнародного фінансового ринку в кризових умовах та перехід фінансових інституцій до процесу діджиталізації. Доведено, що кризові умови останніх років, серед яких можна виділити Brexit, міжнародні торгові конфлікти, війни та пандемії вірусних захворювань, суттєво впливають на функціонування, розвиток та перспективи світових фінансових ринків. Обґрунтовано нагальну потребу швидкого та якісного переходу фінансових інституцій у цифровий формат та прагнення фінансових ринків до введення глибокої діджиталізації. Визначено, що одним з основних чинників впливу на перехід фінансових організацій у цифровий формат є сповільнення реформ щодо встановлення стандартів їх посткризового функціонування. Доведено, що основною проблемою для міжнародних фінансових регуляторів є поступове сповільнення прогресу, яке посилює фрагментацію міжнародного фінансового ринку. Авторами визначено фактори, що обумовлюють фрагментацію, зокрема: особливості національних фінансових структур кожної країни, різні режими оподаткування, відмінні практики регулювання та нагляду, технологічні відмінності банківських систем. З метою вирішення проблемних питань авторами запропоновано застосування діджиталізації та перехід фінансових інституцій, у тому числі і державних, у цифровий формат. Особлива увага в статті приділена новим можливостям для розвитку, які відкриває діджиталізація, та причинам завдяки яким міжнародні фінансові ринки прагнуть змінюватися. Докладно проаналізовано та виділено основні виклики міжнародного фінансового ринку в умовах наявної кризи і разом з тим основні перспективи для розвитку діджиталізації в цілому. До таких перспективних напрямків авторами віднесено: кібер-безпеку; використання BigData; використання штучного інтелекту; технології Blockchain; Fintech; RegTech та взаємоузгодження між регуляторами, а також розвиток мобільного банкінгу, оцифрування бренду. Кожен з перелічених напрямків детально проаналізовано на предмет необхідності застосування технологій діджиталізації та наведено актуальність застосування діджитал-технологій для фінансового сектору.
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The COVID-19 pandemic has changed people's digital behavior and caused giant leaps in various digital businesses. SMEs face various challenging factors in the transformation of their business into a digital ecosystem. Currently, Indonesia is the country with the fastest-growing digital economy and FinTech in ASEAN. Fintech plays a vital role in the digital economy, especially helping SMEs go digital and accelerate their business performance, such as venture capital financing, digital payment services, and financial arrangements. However, the role of fintech has not been maximized in increasing financial inclusion. There are still various obstacles and challenges such as technology adoption, financial literacy, digital literacy, financial inclusion, and fintech inclusion, and various program efforts from all stakeholders to bring SMEs into the digital ecosystem. Without cooperation, increasing financial literacy and financial inclusion and fintech inclusion will be challenging to achieve.
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Reward crowdfunding is a popular channel for entrepreneurial fundraising, whereby backers receive non-monetary benefits in return for monetary contributions while accepting risks of non-delivery on campaign pitch promises. To understand contribution behavior in this context, we apply the Theory of Planned Behavior (TPB) for analyzing contribution intentionality and behavior, as well as their antecedents. We use survey data from 560 users of Finland's leading reward crowdfunding platform-Mesenaatti. Our findings show that an extended TPB model holds for reward crowdfunding and that both financial-contribution intentions and information-sharing intentions predict behavior. This highlights the dual nature of reward crowdfunding-contribution intentions and behavior, where information sharing helps reduce information asymmetry and serves as a quality signal in support of financial contribution. This paper also presents significant differences in attitudes, self-efficacy, financial contribution and information-sharing intentions between high-sum and low-sum contributors.
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We investigate the economic and technological determinants inducing entrepreneurs to establish ventures with the purpose of reinventing financial technology (fintech). We find that countries witness more fintech startup formations when the economy is well-developed and venture capital is readily available. Furthermore, the number of secure Internet servers, mobile telephone subscriptions, and the available labor force has a positive impact on the development of this new market segment. Finally, the more difficult it is for companies to access loans, the higher is the number of fintech startups in a country. Overall, the evidence suggests that fintech startup formation need not be left to chance, but active policies can influence the emergence of this new sector.
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The 3rd Annual European Alternative Finance Report presents the most comprehensive analysis of the status of alternative finance industry in Europe, covering more countries, alternative finance models, as well as industry trends and developments than was available in its predecessors. Much effort has been placed on data quality verifications and clarifications in an ongoing productive and collaborative dialogue with all platform informants and research partners. Here, we wish to acknowledge their invaluable contributions, without which this report could not have been written. Overall, the data collected shows that 2016 saw European alternative finance doubling its volumes from 2015, and continuing an impressive growth. When placed into its short historical perspective, an impression emerges of an industry progressing from an introduction stage catering to innovators, into the growth stage catering to a growing number of early adopters. This growth phase is characterized by entry of new platforms and service providers, overall increasing competition, emergence of first cases of consolidation, diversification of products, and investments in process effectivization and streamlining. Despite exhibiting continuous healthy growth, Europe still punches well below its potential in most countries. Challenges remain both in terms of market education, and amendments of regulation. In Europe regulatory challenges are faced with two barriers. First, most countries have relatively mature and well-established regulatory systems. And, second, these vary significantly across countries. In this respect, our study provides initial evidence that more favorable regulation at national level is associated with higher volumes per capita, as well as with higher share of funding reaching businesses. Accordingly, one can expect that if regulatory conditions will continue to improve at both national and international levels, the industry will be able to maintain and enhance its growth. Nevertheless, one should acknowledge that the story of European alternative finance sector growth, more importantly, is the story of the democratization of access to finance and investment opportunities for people and ventures in Europe. When we present that the industry has generated EUR 2 Billion in 2016, it implies that close to 95% of this sum was actually invested in European venturing reaching businesses, entrepreneurs, artists, and social activists. All aim at creating value to consumers, investors and society via ventures made possible thanks to the support of the crowd. Accordingly, and by extension, more accommodating regulation for the industry, also implies greater access to finance for multiple stakeholders in the economy and more opportunities for value creation. Here, our findings leave much room for optimism for the coming years. Not only are volumes growing strongly, but platforms are investing actively in innovative solutions towards improving performance and customer service. Moreover, evidence suggests that a greater share of platforms engage in cross-border transactions, although, in most cases, these still represent a relatively modest share of overall volumes (thanks to limitations mentioned above). Finally, we hope this report, and the insights emerging form it, will be of help to all stakeholders interested in the development of alternative finance in Europe. And we look forward to a continued cooperation with all our partners in monitoring industry developments in the future.
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This study was undertaken to explore the determinants affecting behavioral intention to adopt mobile banking among generation Y. Based on the theoretical model incorporating the Unified Theory of Acceptance and Use of Technology (UTAUT) and the Technology Acceptance Model (TAM), in this study, a revised and extended model was proposed in order to better explain mobile banking adoption. Moreover, the aim was to determine the mediating effect of hedonic motivation on independent mobile banking adoption. The proposed model was empirically tested using survey data provided by 480 respondents and was further analyzed using a structural Equation model (SEM). The analysis results indicated that the revised model had a good fit in the context of mobile banking adoption by generation Y. In addition, hedonic motivation of mobile banking users was identified as the most important factor motivating customers to adopt mobile banking, whereas mobile banking system security had a negative relationship with hedonic motivation. The results can be used by banking institutions to develop strategies and to improve their services in order to increase the adoption of mobile banking among generation Y.
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Over the past few years, Bitcoin has emerged as the first decentralized, global currency. The rise of Bitcoin has brought attention not only to digital currencies but also to the underlying technology empowering digital currencies—blockchain technology. A blockchain is a distributed ledger that records and secures transactions in a peer-to-peer network. Besides empowering digital currencies, blockchain technology has given innovators the capability of creating digital tokens to represent scarce assets, potentially reshaping the landscape of entrepreneurship and innovation. Blockchain tokens may democratize entrepreneurship by giving entrepreneurs a new way to raise funds and engage stakeholders. They may democratize innovation by giving innovators a new way to develop, deploy, and diffuse decentralized applications. Blockchain technology and tokens have sparked a new wave of innovation, which may start to revolutionize entrepreneurship and innovation.
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Regulatory change and technological developments following the 2008 Global Financial Crisis are changing the nature of financial markets, services, and institutions. At the juncture of these phenomena lies regulatory technology or “RegTech”—the use of technology, particularly information technology, in the context of regulatory monitoring, reporting, and compliance. Regulating rapidly transforming financial systems requires increasing the use of and reliance on RegTech. Whilst the principal regulatory objectives (e.g., financial stability, prudential safety and soundness, consumer protection and market integrity, and market competition and development) remain, their means of application are increasingly inadequate. RegTech developments are leading towards a paradigm shift necessitating the reconceptualization of financial regulation. RegTech to date has focused on the digitization of manual reporting and compliance processes. This offers tremendous cost savings to the financial services industry and regulators. However, the potential of RegTech is far greater – it has the potential to enable a nearly real-time and proportionate regulatory regime that identifies and addresses risk while facilitating more efficient regulatory compliance. We argue that the transformative nature of technology will only be captured by a new approach at the nexus of data, digital identity, and regulation. This paper seeks to expose the inadequacy of digitizing analogue processes in a digital financial world, sets the foundation for a practical understanding of RegTech, and proposes sequenced reforms that could benefit regulators, industry, and entrepreneurs in the financial sector and other industries.
At the tip of the hype cycle, trust-free systems based on blockchain technology promise to revolutionize interactions between peers that require high degrees of trust, usually facilitated by third party providers. Peer-to-peer platforms for resource sharing represent a frequently discussed field of application for “trust-free” blockchain technology. However, trust between peers plays a crucial and complex role in virtually all sharing economy interactions. In this article, we hence shed light on how these conflicting notions may be resolved and explore the potential of blockchain technology for dissolving the issue of trust in the sharing economy. By means of a dual literature review we find that 1) the conceptualization of trust differs substantially between the contexts of blockchain and the sharing economy, 2) blockchain technology is to some degree suitable to replace trust in platform providers, and that 3) trust-free systems are hardly transferable to sharing economy interactions and will crucially depend on the development of trusted interfaces for blockchain-based sharing economy ecosystems.
As a new term in the financial industry, FinTech has become a popular term that describes novel technologies adopted by the financial service institutions. This term covers a large scope of techniques, from data security to financial service deliveries. An accurate and up-to-date awareness of FinTech has an urgent demand for both academics and professionals. This work aims to produce a survey of FinTech by collecting and reviewing contemporary achievements, by which a theoretical data-driven FinTech framework is proposed. Five technical aspects are summarized and involved, which include security and privacy, data techniques, hardware and infrastructure, applications and management, and service models. The main findings of this work are fundamentals of forming active FinTech solutions.
Fintech brings about a new paradigm in which information technology is driving innovation in the financial industry. Fintech is touted as a game changing, disruptive innovation capable of shaking up traditional financial markets. This article introduces a historical view of fintech and discusses the ecosystem of the fintech sector. We then discuss various fintech business models and investment types. This article illustrates the use of real options for fintech investment decisions. Finally, technical and managerial challenges for both fintech startups and traditional financial institutions are discussed.