Financial technology, often shortened to fintech, is the technology and innovation that aims to compete with traditional financial methods in the delivery of financial services. It is an emerging industry that uses technology to improve activities in finance. The use of smartphones for mobile banking, investing services and cryptocurrency are examples of technologies aiming to make financial services more accessible to the general public. Financial technology companies consist of both startups and established financial institutions and technology companies trying to replace or enhance the usage of financial services provided by existing financial companies.
After reviewing more than 200 scientific papers citing the term "fintech," a study on the definition of fintech concluded that "fintech is a new financial industry that applies technology to improve financial activities." Fintech is the new applications, processes, products, or business models in the financial services industry, composed of one or more complementary financial services and provided as an end-to-end process via the Internet. Fintech can also be considered as “any innovative ideas that improve financial service processes by proposing technology solutions according to different business situations, while the ideas could also lead to new business models or even new businesses." 
Financial technology has been used to automate insurance, trading, banking services, and risk management.
The services may originate from various independent service providers including at least one licensed bank or insurer. The interconnection is enabled through open APIs and open banking and supported by regulations such as the European Payment Services Directive.
In trading on capital markets, innovative electronic trading platforms facilitate trades online and in real time. Social trading networks allow investors to observe the trading behavior of their peers and expert traders and to follow their investment strategies on currency exchange and capital markets. The platforms require little or no knowledge about financial markets, and have been described as disruptors which provide "a low-cost, sophisticated alternative to traditional wealth managers" by the World Economic Forum.
Robo-advisers are a class of automated financial adviser that provide financial advice or investment management online with moderate to minimal human intervention. They provide digital financial advice based on mathematical rules or algorithms, and thus can provide a low-cost alternative to a human advisers.
Global investment in financial technology increased more than 2,200% from $930 million in 2008 to more than $22 billion in 2015. The nascent financial technology industry in London has seen rapid growth over the last few years, according to the office of the Mayor of London. Forty percent of the City of London's workforce is employed in financial and technology services.
In Europe, $1.5 billion was invested in financial technology companies in 2014, with London-based companies receiving $539 million, Amsterdam-based companies $306 million, and Stockholm-based companies receiving $266 million in investment. After London, Stockholm is the second highest funded city in Europe in the past 10 years. Europe's fintech deals reached a five-quarter high, rising from 37 in Q4 2015 to 47 in Q1 2016. Lithuania is starting to become a northern European hub for financial technology companies since the news in 2016 about the possible exit of Britain from the European Union. Lithuania has issued 51 fintech licenses since 2016, 32 of those in 2017. 
Fintech companies in the United States raised $12.4 billion in 2018, a 43% increase over 2017 figures. 
In the Asia Pacific region, the growth will see a new financial technology hub to be opened in Sydney, in April 2015. According to KPMG, Sydney's financial services sector in 2017 creates 9 per cent of national GDP and is bigger than the financial services sector in either Hong Kong or Singapore. A financial technology innovation lab was launched in Hong Kong in 2015. In 2015, the Monetary Authority of Singapore launched an initiative named Fintech and Information Group to draw in start-ups from around the world. It pledged to spend $225 million in the fintech sector over the next five years.
Awards and recognition
Financial magazine Forbes created a list of the leading disrupters in financial technology for its Forbes 2019 global Fintech 50. In Europe there is a list called the FinTech 50, which aims to recognise the most innovative companies in fintech.
A report published in February 2016 by EY commissioned by the UK Treasury compared seven leading fintech hubs: the United Kingdom, California, New York City, Singapore, Germany, Australia and Hong Kong. It ranked California first for 'talent' and 'capital', the United Kingdom first for 'government policy' and New York City first for 'demand'.
Finance is seen as one of the industries most vulnerable to disruption by software because financial services, much like publishing, are made of information rather than concrete goods. In particular blockchains have the potential to reduce the cost of transacting in a financial system. While finance has been shielded by regulation until now, and weathered the dot-com boom without major upheaval, a new wave of startups is increasingly "disaggregating" global banks. However, aggressive enforcement of the Bank Secrecy Act and money transmission regulations represents an ongoing threat to fintech companies. In response, the International Monetary Fund (IMF) and the World Bank jointly presented Bali Fintech Agenda on October 11, 2018 which consists of 12 policy elements acting as a guidelines for various governments and central banking institutions to adopt and deploy "rapid advances in financial technology".
The New York Venture Capital Association (NYVCA) hosts annual summits to educate those interested in learning more about fintech. In 2018 alone, fintech was responsible for over 1,700 deals worth over 40 billion dollars.
Challenges and solutions
The examples and perspective in this section deal primarily with the United States and do not represent a worldwide view of the subject. (June 2018) (Learn how and when to remove this template message)
Data security is another issue regulators are concerned about because of the threat of hacking as well as the need to protect sensitive consumer and corporate financial data. Leading global fintech companies are proactively turning to cloud technology to meet increasingly stringent compliance regulations.
The Federal Trade Commission provides free resources for corporations of all sizes to meet their legal obligations of protecting sensitive data. Several private initiatives suggest that multiple layers of defense can help isolate and secure financial data.
The online financial sector is also an increasing target of distributed denial of service extortion attacks. This security challenge is also faced by historical bank companies since they do offer Internet-connected customer services.
References and notes
- Infinite Financial Intermediation, 50 Wake Forest Law Review 643 (2015)
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- Media related to Financial technology at Wikimedia Commons