Drivers of Financial Technologies

Introduction

The digital revolution and technical improvements imply a paradigm shift in the financial sector. New business models that place cutting-edge technology at the service of the customer are the foundation of this transition (Breidbach, Keating, & Lim, 2020). Another crucial element of the value proposition of financial technology is the ability to focus on the customer with more flexible financial services than those offered by the previous model (FinTech). The early competition between banking and FinTech has been replaced by cooperation (Basole & Patel, 2018; O'Halloran & Nowaczyk, 2019).

The digitization and connectivity of technology have led to an increase in the number of banking websites and companies that specialize in electronic transfers, online brokers, online loans, crowdsourcing, and digital payments. This has led to the growth of the global financial system. From this vantage point, the word “FinTech” refers to new technologies that have revolutionized and reshaped the financial industry (Song, 2015). This is because the terms “finance” and “technology” are related to each other. FinTech is the use of technological advancements in financial operations, products, and services. (Tian, Han, Wang, Lu, & Zhan, 2015). In this regard, FinTech is being utilized to draw in conventional banking customers, optimize business transactions, enhance credit giving and marketing, and increase the efficiency of banking operations (Li, Liu, & Xie, 2019; Wonglimpiyarat, 2019). The outdated systems are being replaced by ones that allow for the automation of financial services thanks to the use of biometric identification, cryptocurrencies, artificial intelligence, machine learning, blockchain, and big data, among other technologies (H.-y. Chang, Liang, & Wang, 2019; Hendrikse, 2019; Yacoub, 2017).

The rise of FinTech has altered consumer behavior, ecosystems, the role of technology, and industrial and regulatory structures (Gozman, Liebenau, & Mangan, 2018; Wonglimpiyarat, 2017). FinTech's growth has led to “financial service disintermediation” and the need for a new kind of investor and consumer protection (Giudici, 2018; Guo & Liang, 2016). FinTech start-ups can sidestep the minimum capital requirements and intermediation fees often associated with conventional banking services (Iman, 2018). Big data analytics and data science have altered how data are collected, processed, and analyzed, which has drastically decreased search costs (Giudici, 2018). Owing to the COVID-19 pandemic's limitations and subsequent quarantine, methods like contactless payments, lower costs, and more mobility have become popular. Indeed, convenience and security are the main e-commerce trends right now (Gu, Ślusarczyk, Hajizada, Kovalyova, & Sakhbieva, 2021). Financial institutions have only lately incorporated FinTech advances into their services and products, even though the majority of the technology on which they are built is not brand-new (Schindler, 2017).

Financial institutions, regulators, and FinTech businesses are just a few of the elements that make up the FinTech ecosystem. Running a successful FinTech service may benefit from the integration of procedures and rules in these three components (Taherdoost, 2023). This chapter focuses on the factors influencing the development of FinTech and gives tips for identifying the possibilities that development in the field presents.