2.3.5. Financial Technology (FinTech)

Financial technology (FinTech) is recognized as one of the most important innovations in the financial industry and is evolving at a rapid speed, which is driven in part by the sharing economy, favorable regulation, and information technology (Lee and Shin 2018). FinTech systems provide new and advanced business models such as crowdfunding, P2P, and B2B using disruptive technology, and as a consequence, the traditional banking business model faces a major challenge (Dasho et al. 2017). The progress of FinTech is defined as an uninterrupted process during which finance and technology have evolved together based on rapidly developing technology (Arner et al. 2015). FinTech promises to reshape the financial industry by cutting costs, improving the quality of financial services, and creating a more diverse and stable financial landscape. After all, it can be perceived as a FinTech revolution. According to PwC (2017), 83%of financial institutions believe that various aspects of their business are at risk to FinTech startups. Figure 7 presents the five components of the FinTech ecosystem.

**Figure 7.** The five elements of the FinTech ecosystem. Source: Lee and Shin (2018).


At the center of the ecosystem are FinTech entrepreneurial organizations that represent the Industry 4.0 in a very good way. The core of these organizations in Industry 4.0: innovation in payment, wealth management, lending, financial aggregation, capital markets, lower operating cost insurance, targeting the niche market, and providing personalized services in facing traditional companies. Figure 8 shows the investment in FinTech companies from 2010 to 2017.

**Figure 8.** Investing in FinTech companies. Source: (KPMG 2017).

As a result, venture capitalists have invested more than \$12 billion in FinTech startups over the past five years. In Figure 9, you can see the list of companies in the field of FinTechnologies up to Year 2017 that have become Unicorn companies (with a market value of \$1 billion).

**Figure 9.** Unicorn companies. Source: (KPMG 2018).

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Certain researchers stated that the FinTech structure of business is digital-based financial services that range from payment systems, banking services, insurance services, loans, and fund collections, to mere advice or learning to the public through digital media (Koesworo et al. 2019).
