Fintech firms and incumbent banks: competition or collaboration? : What factors impact how and why fintech firms and traditional banks decide the extent to collaborate with each other in the peer-to-peer lending sector in Norway?

Master's thesis Business Administration BE501 - University of Agder 2019Introduction: The fintech sector has grown from a narrow area of interest to become a major area of interest in Norway. Fintech firms and traditional banks seem to have a symbiotic relationship,with theircomplementary strengths contributing to the success of both parties. This paper therefore studiesthefactorsthatimpact the extent of collaboration between fintech firms and traditional banks, focusing on the peer-to-peer crowdlending sector in Norway. Methods:We adoptedaqualitative research design, using multiple-casestudyanalysis.Through a purposive sampling technique, we identified and carefully selected four fintech firms and three incumbent banks.We selected three scenarios:(1) those who have been chosen to remain separate(no collaboration between fintech firms and traditional banks),(2) collaborate as allies, choosing a strategic alliance strategy, or (3) selected a Mergers and Acquisitions strategy. We conducted seven in-depthinterviews in total,by usingsemi-structured interviews in an attempt to answerthe research question. We created a coding tree that helped us to both analyze the studiedcases and eventually aid in a cross-casecomparisonanalysis. In order to achieve triangulation and consistency concerning our findings, we collected complementary information through multiple sources: in-depth interviews and archival documentssuch as company websites, business reports and the news.Results:We have developed two research modelsfrom both the fintech firms’ and the banks’ perspective. Ourfinal model,from the fintech firms’ perspective,includes the following factors; regulation, trust, customer-centric approach, organizational cultural fit, strategic fit, innovation, capital, brand image, growth and expertise. From the banks’ perspective,we have identified the following factors; regulation, customer-centric approach, financial inclusion, organizational cultural fit, strategic fit, innovation, survivability, brand image, growth,risk management, expertise and profitability. Conclusions: Some identifiedfactors support earlier findings in the academic literature, while otherscontradict earlier findings. Additionally, we have identified factors that to the best of our knowledge,have not yet been identified intheliterature, concerning the studied phenomenon. Hence, we suggestthat these newly identified factors should be further investigated in a quantitative study

The (R) evolution and future of banking system and commerce

Treball Final de Grau. Grau en Finances i Comptabilitat. Codi: FC1049. Curs acadèmic 2016-2017The aim of this paper is providing information giving an overview about a new age in the financial field. Financial Technology (Fintech) industry is growing faster than other industries and it is changing the way we know the financial markets, customer’s behavior, banking system, payments and, in general, the interaction between financial clients and the financial system. Banks are one of the most affected by this structural change; they must to adopt and re-focus their business and the way they have been offering financial services to their clients. Fintech companies have been receiving much attention in the last few years. And, although the development of Fintech companies is still in early stages, many researchers believe that it will define the path and shape the future of the financial services industry. Digital Financial Services (DFS) are at the forefront as key financial solutions for improving, complementing and enhancing financial services to supply and cover customers’ needs

Peer to Peer Lending – A (Financial Stability) Risk Perspective

The aim of this paper is to discuss P2P lending, a subcategory of crowdfunding, from a (financial stability) risk perspective. The discussion focuses on a number of dimensions such as the role of soft information, herding, platform default risk, liquidity risk, and the institutionalization of P2P markets. Overall, we conclude that P2P lending is more risky than traditional banking. However, it is important to recognize that a constant conclusion would be misleading. P2P platforms have evolved and changed their appearance markedly over time, which implies that although our final conclusion of increased riskiness through P2P markets remains valid over time, it is based on different arguments at different points in time. In addition, we discuss that acting on P2P online platforms satisfies most possible definitions of shadow banking and shows significant similarities with many observed aspects of shadow banking. We thus infer that P2P lending can be considered part of the shadow banking sector

Tunisian Fintech: An Ecosystem under Construction - Can COVID 19 be the Fuel to Ignite the Construction of Tunisian Fintech?

Fintech leads the most powerful technology and finance in the industry. Appearing recently in the newspapers, this term describes the disruptive challenge in the financial sectors. Fintech has primarily emerged in the world, and then Europe followed the lead before it starts in Tunisia. Although Fintech attracts the customers through the innovation and the technology, it worries users because of the absence of the intermediaries. Fintechs create metamorphosis in the financial field of digital disruption and really shake up the reserved world of banking services, savings, means of payment, and financing. The main idea of this chapter is to describe the Fintech ecosystem in Tunisia. It is about situating the concepts around Fintech by studying the reasons for its emergence and its business segments. Then, the analysis provides the elements of the Tunisian ecosystem of Fintech, the issues, and the challenges. This chapter aims to capture the essence of this phenomenon by discussing the challenges for both Fintech startups and traditional financial

How financial technologies are revolutionizing the financial industry

JEL Classification: G18, G21Financial technologies (fintech) have known an incredible exposure over the last years, attracting investments of large billions of dollars. Fintech can be seen as the match between finance and technology and they are imposing a way of thinking in all the branches of the financial industry. The main aim of this dissertation is to study how the financial technologies are revolutionizing the financial industry. After the financial crisis of 2008, customers have changed their ways of seeing “Finance” and, more particularly, “Banks”, looking for products and services responding to their needs. Moreover, the financial crisis has highlighted a relevant number of dysfunctions of the banking sector and on the financial regulation. Regulators have strengthened their requirements for banks, particularly in their relations with clients. These have opened a breach for Fintech companies and they are using it. Fintech companies rely on a different value proposition to clients that is based on a timesaving, fast and clear experience. Indeed they are proposing majors innovation in products and also in the processes. Fintech companies have put the customer back at the center of all their attention; customer becomes again the top priority. Financial technologies have already revolutionized the finance industry even if their impact on the market, for the moment may still be seen as trivial.As tecnologias financeiras (Fintech) têm conhecido uma crescente exposição desde há vários anos, atraindo o investimento de largos milhões de dólares. As Fintech podem ser vistas como o casamento entre finanças e tecnologia e estão a obrigar a repensar todos os ramos da indústria financeira. O principal objetivo desta dissertação é estudar como as tecnologias financeiras estão a revolucionar a indústria financeira. Após a crise financeira de 2008, os clientes mudaram a sua maneira de olhar para as "Finanças" e, mais particularmente, para os "Bancos", na procura de produtos e serviços que respondam às suas necessidades. Além disso, a crise financeira colocou a descoberto um número relevante de disfunções do sector bancário e na regulação financeira. Os reguladores aumentaram as suas exigências para com os bancos, particularmente nas suas relações com os clientes. Tudo isto criou um conjunto de oportunidades para as empresas fintech que estas aproveitaram . Estas empresas assentam fintech numa proposta de valor diferente para os clientes, que assenta numa experiência de economia de tempo, rápida e clara. Na verdade, propõem um conjunto de inovações importantes não apenas em produtos mas também nos processos. As empresas fintech voltaram a colocar o cliente no centro das atenções. O cliente volta a ser a principal prioridade. As tecnologias financeiras revolucionaram a indústria financeira ainda que, neste momento, o seu impacto no mercado possa ainda ser visto como algo trivial

FINTECH, BANKS, AND THE COVID-19 PANDEMIC: EVIDENCE FROM INDONESIA

This study investigates the relationship between fintech and banks and how this relationship is affected by the COVID-19 pandemic. We use monthly stock data of all banks consistently listed on the Indonesian Stock Exchange from February 2018 to March 2021. For fintech data, we use a total of four proxies that encompass both lending and borrowing aspects of peer-to-peer lending fintech. To provide robust results, we use five model specifications. Furthermore, we also estimate models using both the fixed effect and the two-step system generalized method of moments estimators. Our estimates indicate a relatively less negative impact of fintech on bigger banks. This relationship is further exemplified during the COVID-19 pandemic period. We argue that these findings have significant implications for the Indonesian financial authorities’ open banking strategy and for the future of the Indonesian financial system in general

The FinTech market in Germany

In this study, conducted on behalf of the Federal Ministry of Finance, we provide the first comprehensive analysis of the German FinTech industry. We quantify the market volume of the industry between 2007 and 2015. On the basis of this data, we also predict the future development of eight segments of the FinTech market, offering detailed forecasts for the years 2020, 2025, and 2035. Moreover, we provide a comprehensive overview of current trends and the drivers of growth that have affected the FinTech industry in the past, as well as the factors that could spur and hinder growth within it in the future

Fintechs in South Africa: Impact on regulation, incumbents and consumers

Background: The financial services industry in South Africa has undergone many changes that have given birth to fintechs. Most of these changes are driven by the advent of technology and evolving customer expectations. Fintechs have led to process disruptions and business model transformations, yet their implications have yet to be sufficiently studied. Therefore, it is essential to close this knowledge gap by investigating the impact of fintechs on this industry. Objectives: This research aimed to investigate the impact of fintechs in the financial services industry in South Africa. Method: A qualitative study was conducted in which 18 industry experts were interviewed using semi-structured interviews. The interviews were audio-recorded and transcribed for data analysis. ATLAS.ti 22 was used to organise and analyse data. Results: Fintechs increase competition for the incumbents, reduce profits, expose the inability of the incumbents to be agile and introduce new regulatory risks in the financial services industry. In contrast, fintechs have also brought some positive changes into the industry: financial inclusion, new growth opportunities, increasing choices for consumers and making the industry more competitive, reducing costs, customising financial services, bringing convenience and forcing incumbents and regulators to become more innovative. Conclusion: This study uncovered the positive and negative effects of fintechs in financial services in South Africa. Contribution: The study will benefit academia by expanding the body of knowledge about fintech research and improving the holistic understanding of this field in emerging economies, which can inspire future research on fintech and its application

Changing financial system architecture under the influence of the fintech market: A literature review

In the past seven decades, especially since the Global Financial Crisis, the financial system’s architecture has changed significantly around the world. New financial market entrants, such as fintech start-up companies, offer financial products and services more efficiently than established financial institutions (especially banks and insurance companies), bypassing the regulatory requirements established intermediaries must comply with. Despite the heterogeneity in the fintech concept, we use this term to consider innovations in financial products and services based on emerging information and communication technologies (i.e., information technology and mobile connectivity) as solutions that are changing the financial structure worldwide. Although the share of new participants in the financial system is rather small compared to the incumbents, fintech innovations are continuously advancing (e.g., crowdfunding, marketplace lending, cryptocurrencies, copy trading, robo-advice, insurtech, etc.), and their share is growing fast. This paper provides an overview of the fintech market and its impact (actual and potential) on the financial system’s architecture based on a comprehensive review of the theoretical and empirical literature