۱- Fintech: An introduction

۲- Emergence of fintech

۳- Fintech ecosystem

۴- Fintech business models

۵- Investment decisions for fintech projects and real options

۶- A real options approach

۷- Challenges facing the fintech sector

۸- Summary

References

Abstract

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.

Fintech: An introduction

Financial technology (fintech) is recognized as one of the most important innovations in the financial industry and is evolving at a rapid speed, driven in part by the sharing economy, favorable regulation, and information technology. Fintech promises to reshape the financial industry by cutting costs, improving the quality of financial services, and creating a more diverse and stable financial landscape (‘The FinTech Revolution,’ ۲۰۱۵). The technological developments in infrastructure, big data, data analytics, and mobile devices allow fintech startups to disintermediate traditional financial firms with unique, niche, and personalized services. According to PwC (2016), 83% of financial institutions believe that various aspects of their business are at risk to fintech startups. Due to fintech companies already having a significant impact on the financial industry, every financial firm needs to build capabilities to leverage and/or invest in fintech in order to stay competitive. The growth of investment in fintech has been phenomenal. According to Accenture (2016a), global investment in fintech ventures in the first quarter of 2016 reached $5.3 billion, a 67% increase overthe same period the previous year, and the percentage of investments going to fintech companies in Europe and the Asia-Pacific nearly doubled to 62%. Much of this increase in investment has come from traditional financial institutions. Traditional financial institutions invest in external fintech startups in the form of collaborative fintech ventures, as well as their internal fintech projects in hopes of leapfrogging fintech innovation and gaining a competitive advantage.