Assignment Question

Following is an excerpt from Anne-Laure Mention, (2019), The Future of Fintech, Research-Technology Management Volume 62, 2019 - Issue 4

Fintech is fast becoming a global phenomenon, led by innovators and followed closely by academics, and now drawing the attention of regulators. Broadly, fintech is an umbrella term for innovative technology-enabled financial services and the business models that accompany those services. In simpler terms, fintech can be used to describe any innovation that relates to how businesses seek to improve the process, delivery, and use of financial services. While its impact to date has primarily been felt in developing economies like China and India (Ernst & Young 2017), it promises to force legacy financial institutions in developed economies to clarify their strategies, develop new capabilities, and transform their cultures.

 

Driven by what Gobble (2018) defines as digitalization and digitization, fintech is increasingly embedded in everyday economic transactions. Ernst & Young’s (2017) fintech adoption index showed that nearly one-third of the consumers in the 20 markets surveyed use at least two fintech services, and 84 percent of those surveyed were aware of fintech services. The innovation world has already recognized the potential of financial innovation, and the number, variety, and reach of fintech startups has risen in the last decade (KPMG 2018). Investment is growing too: Five years ago, the fintech industry attracted $12.2 billion in investment (Accenture 2016); in 2018, the top 250 fintech firms collectively raised more than $31.85 billion (CBInsights 2018). KPMG’s (2018) Fintech Pulse report stated that global fintech investment increased from $50.8 billion in 2017 to $111.8 billion in 2018, more than doubling, with an unprecedented number of deals through multiple channels.

 

Not surprisingly, academic interest in fintech has followed a similar trajectory (Gomber, Koch, and Siering 2017). Several journals have hosted special issues on the topic, including Journal of Management Information Systems’s “Financial Information Systems and the FinTech Revolution” (Gomber et al. 2018), International Journal of Entrepreneurship and Management’s “Innovation for Financial Services” (Mention, Torkkeli, and Huizingh 2012), and Philosophy and Technology’s “Towards a Philosophy of Financial Technologies” (Coeckelbergh, DuPont, and Reijers 2018). Some scholars have focused on categorizing fintech across dimensions (for instance, the degree of innovation, innovation object, and innovation scope), while others are attempting to develop a consensual definition for fintech. Moreover, whether fintech should be considered a product, a business model, or a mechanism to disrupt the industry and create competition remains an ongoing academic debate.

 

Whatever it is, fintech is here to stay, supported by emerging technologies such as artificial intelligence, blockchain, smart contracts, and machine learning, to name a few. However, the jury is still out on what the future of fintech will look like. The growing momentum is delivering double-edged consequences—modernizing financial architectures and catalyzing consumer and market behavior change while disrupting incumbent employers, service models, and regulatory structures (Nicoletti 2017).

 

Expanding technological affordances have changed the game. Fintech has previously grown on its promise to expand access to the financial system by providing services to traditionally unserved or underserved populations. But increasingly, the faster/cheaper/better service models offered by fintech startups are disrupting the incumbent banking system. Financial products that traditionally have been the exclusive domain of traditionally licensed credit institutions—payment services and loans, among others—are now offered by fintech firms (EBA 2017). These smaller, more agile companies support a greater diversity of products and providers; they promise greater portability of financial products that are now digitized, built on hybrid and cross-industry business models that allow them to access markets often closed to traditional banks and credit offerors. They also offer greater transparency and improved risk management, at least partly enabled by their ability to get instant customer feedback and use it to power real-time adjustments in the services they offer.

Required:

You are required to write an essay (in literature review format) on the contribution of fintech on economic growth. You may discuss it from different perspectives (financial inclusion, better efficiency and security in financial system, etc) and different components of Fintech (Robo-Advisory, Crowdfunding, E-Wallets and International Payments, Blockchain, etc.). In this assignment marks are allocated as follows: Introduction (20 marks); Critical literature review (40 marks); Conclusion (20 marks); Logical flow and appropriate structure (20 marks).

[Total Marks=100]