FinTech refers to new solutions which demonstrate an incremental or radical / disruptive innovation development of applications, processes, products or business models in the financial services industry. These solutions can be differentiated in at least five areas.
- First, the banking or insurance sector are distinguished as potential business sectors. Solutions for the insurance industry are often more specifically named “InsurTech”.
- Second, the solutions differ with regard to their supported business processes such as financial information, payments, investments, financing, advisory and cross-process support. An example is mobile payment solutions.
- Third, the targeted customer segment distinguishes between retail, private and corporate banking as well as life and non-life insurance. An example are telematics-based insurances that calculate the fees based on customer behaviour in the area of non-life insurances.
- Fourth, the interaction form can either be business-to-business (B2B), business-to-consumer (B2C) or consumer-to-consumer (C2C). An example are social trading solutions for C2C.
- Fifth, the solutions vary with regard to their market position. Some for example provide complementary services such as personal finance management systems, others focus on competitive solutions such as e.g. peer-to-peer lending.
Global investment in financial technology increased more than twelvefold from $930 million in 2008 to more than $12 billion in 2014