The concept of FinTech
FinTech is short for Financial Technology, the central concept of structural change and digitization within the financial services industry. Under the name of FinTech, financial services are understood as digital infrastructures allowing the establishment of new types of agreements and procedures in the classic areas of banking. According to Jean Rognetta, Delegate General of Croissance Plus, a French association of entrepreneurs, “the Digital revolution is increasingly challenging banking and insurance services, an industry that only a few thought could be transformed until recently.”
As of now, disruptive investments are targeting all businesses such as digital payments, online money remittance, P2P transfers, online bill payments or digital currencies. The investment in FinTech companies has exceeded $12 billion in the year 2014 alone.
FinTechs in France and Europe
In France, the largest FinTech segment is digital payments, with a global transaction value that is expected to reach €80 billion in 2016. The digital payments market segment is led by consumer transactions made online via various payment methods (credit cards, direct debit, invoice, online payment providers) through different types of device or terminal (desktop, smartphone, tablet or wearable).
Beyond digital payments, FinTech companies – including many startups - address a wide range of technologies and services such as blockchain, bitcoin wallets, trading platforms, peer-to-peer platforms to exchange cash currencies, web-based marketplaces for capital funding, crowdfunding platforms and collaborative consumption platforms which can accept third-party payments, smart point-of-sale solutions that help merchants to strive and grow in a digital environment, online marketplaces for asset managers, etc…
The regulation framework is accompanying and fostering the sustainable development of FinTech. The European E-money Directive is building a regulatory foundation and set of rules for technology to be transformed into new and innovative financial services and models. However, whilst the regulation on different kinds of e-money institutions is quite tight, the commercial opportunities for FinTech companies will remain limited as long as they have no real access to core-banking services…