Introduction
FinTech:History and Today
Topic 1 AFIN8014 FinTech and Innovation
Learning Objectives
1. Gain insights of FinTech development
2. Understand the FinTech global landscape: its investment, adoptions and domains
3. Outline the main Fin-technologies and the enabled financial innovations
4. Appreciate the disruption nature of FinTech
4
3
2
1
Finance Technology
A B
FinTech
The use of
technology to
deliver financial
solutions Great attentions
since last decade
Term traced
back to the
early 1990s
What is FinTech ? 2
1866
the first
transatlantic
cable
1983
Online
Banking
1971
NASDAQ
1850 1950 1960 1965 1970 1975 1980
1973
1967 SWIFT
First ATM
150 years of FinTech
1999
Internet 2019
Bubbles ASX: CHESS
Replacement with
Blockchain
1990s 2009
Quantitative Bitcoin Launched
Risk Kickstarter
Established
management
2007
IPhone Launched
M-Pesa in Kenya
1990 1995 2000 2005 2010 2015 2020
2008 2014
Wealthfront AliPay
Re-branched as
Ant Financial
150 years of FinTech
150 years of FinTech
• 1866-1967 ：FinTech 1.0
• The first transatlantic cable allowed the initial combination of finance and
technology, culminating in the first period of financial globalisation.
• 1967-2008：FinTech 2.0
• Analogue to digital, led by traditional financial institutions:
• 2008-Present: FinTech 3.0
• Emergence of new players (e.g. start-ups) alongside existing large
companies already in the space (e.g. core banking vendors).
• FinTech 3.0 : Developed Countries
• FinTech 3.5: Developing Countries
• Source: Arner et al., 2016
150 years of FinTech
Date 1866 - 1967 1967 - 2008 2008 - Current
Era FinTech 1.0 FinTech 2.0 FinTech 3.0 FinTech 3.5
Emerging /
Geography Global / Developed Global / Developed Developed
Developing
Mobile / Start-ups
Key Elements Infrastructure / computerisation Traditional / internet
/ New entrants
2008 financial
Last mover
Shift Origin Linkages Digitalization crisis /
advantage
smartphone
Source: Arner et.al., 2016
The Global Fintech Landscape:
FinTech Adoption
2019: “FinTech today is a host of
seasoned companies that offer a
broad array of financial services 2019
and operate on a global stage.”
EY defines FinTech as
‘organizations that
combine innovative
2017
business models and 2017: the industry had
technology to enable, grown rapidly and had
enhance and disrupt “achieved initial mass
financial services.’ adoption”.
.
EY FinTech Adoption Index
2015
2015: FinTech, while
nascent, was “clearly
more than just hype.”
The Global Fintech Landscape:
FinTech Investment
Total Investment Activity (VC, PE and M&A) in FinTech
Source: Pulse of FinTech, 2018 by KPMG
• Global FinTech investment doubled in 2018
• The Americas, Europe and Asia all saw significant
growth in FinTech Investment
2018
$111.8
2196
2016
Deals
$63.4B
2015 1893
$67.1B Deals
2014 1925
$45.4B Deals
1543
2013 Deals
$18.9B
1132
deals
Global Top 10 FinTech Deals in 2018
Source: Pulse of Fintech 2018, Global Analysis of Fintech, KPMG International (data provided by PitchBook) February
13, 2019
FinTech Australia
Source: EY FinTech Australia Census 2019
Fin-
Technologies
Blockchain Big Data
Artificial Biometric
Others
Intelligence Technologies
Underlying Technologies
Mobile
RegTech
Payment
Crowdfunding
Crypto-
currency
Financial
Innovations Robot-
ProTech Advising
P2P
Lending
InsurTech
Numerous
Others
Disruption Nature of FinTech
Infrastructure
Central
banks Regulations
Supervisions
International
Financial Payment, clearing
Institutions settlement and
custodian system
Global
M
Financial
System
Official Private
Markets Banks
Sectors Sectors
Other
Intermediaries
Source: designed based on Masera, 2011
Disruption Nature of FinTech
GFS
ensures that scarce savings are
allocated optimally among
competing investment over time
and across geographic space
Intermediation
• links providers and users of funds
• effectuates the primary functions
of finance and create efficiencies
FinTech Disruption
Driven by technologies and regulations,
more people seek to bypass
traditional financial markets to obtain
lower costs, fewer restrictions and more
efficiency .
FinTech Disruption
Competition/Cooperation among
disruptors and incumbent
financial institutions
Disruption Nature of FinTech
Existing Problems
Be innovative to solve problems
• Altering the relationship between
• Money and consumers and financial service
Payment providers
• Financial • Lowering barriers for market entry
Advisory
• Disrupting the existing business models in
• Markets and
financial industry
Trading
• Challenging the roles of traditional
• Pricing and
financial intermediaries
Risk
• Competition and/or cooperation
• Others
among incumbents and new entries
• How to evaluate innovations and how to
regulate them ?
Applications of New Technologies to Financial Services
Technology Advisory Investment Lending & Insurance Security Operations Communications
Payment & Trading Funding
Blockchain
(Distributed
Ledger)
Big Data
Internet of
Things
Cloud
Computing
Artificial
Intelligence
Biometric
Augmented/
Virtual
Reality
Source: table 1, OECD (2018), Financial Markets, Insurance and Private Pensions: Digitalisation and Finance
