CORPORATE FINANCE
PROJECT
FINANCIAL TECHNOLOGY
(FINTECH)
PREPARED BY
• Khaled Ahmed
• Safy El Dein Ahmed
• Ahmed Shawky
• Mohamed Khaled
SUPERVISED BY
• Dr. Menan Etab
CONTENTS
introduction 3
what is financial technology (fintech)? 4
Understanding Fintech 5
Fintech in Practice 6
Fintech’s Expanding Horizons 7
Fintech and New Technologies 8
The Future of Fintech: 9
The Bottom Line: 9
Fintech Landscape 10
Top 200 Fintech Companies Revolutionizing the World of Finance 12
Fintech Users 14
Evolution of fintech 16
Regulation and Fintech 18
What are examples of fintech? 19
conclusion 20
references 21
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INTRODUCTION
The financial services industry is undergoing a seismic shift. Fueled by technological innovation,
financial technology, or fintech, is rapidly transforming the way we manage our money, invest for
the future, and access financial products and services. This project dives deep into the world of
fintech, exploring its emergence, applications, and impact on traditional financial institutions. We
will examine how fintech is not only making finance more accessible and efficient but also creating
new opportunities and challenges for businesses and consumers alike. By understanding the
fintech landscape, we can better prepare for the future of finance.
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WHAT IS FINANCIAL TECHNOLOGY (FINTECH)?
The word “fintech” is simply a combination of the words “financial” and “technology”. It describes
the use of technology to deliver financial services and products to consumers. This could be in the
areas of banking, insurance, investing – anything that relates to finance. Although it’s a relatively
new word, fintech is actually nothing new. Technology has always changed the financial industry.
However, the internet, combined with the widespread use of devices like smartphones and tablets,
means the speed of this change has accelerated greatly in recent years.
When fintech emerged in the 21st century, the term was initially applied to the technology
employed at the backend systems of established financial institutions, such as banks. From 2018
or so to 2022, there was a shift to consumer-oriented services. Fintech now includes different
sectors and industries such as education, retail banking, fundraising and nonprofit, and investment
management, to name a few.
Fintech also includes the development and use of cryptocurrencies, such as Bitcoin. While that
segment of fintech may see the most headlines, the big money still lies in the traditional global
banking industry and its multitrillion-dollar market capitalization.
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UNDERSTANDING FINTECH
Fintech, or financial technology, is a technological innovation that seeks to improve and automate
the delivery and use of financial services. Fintech services help companies and consumers better
manage their financial processes utilizing their computers and smartphones. Fintech startups have
disrupted the financial sector by expanding inclusion to all customers and institutions. The new
technologies are data-focused, allowing financial institutions to predict customer behaviors and
help the companies cut down on their operational costs.
We likely use some element of fintech daily. Some examples include transferring money from
your debit account to your checking account via your iPhone, sending money to a friend through
Venmo, or managing investments through an online broker. According to EY’s 2019 Global
FinTech Adoption Index, two-thirds of consumers utilize at least two or more fintech services, and
those consumers are increasingly aware of fintech as a part of their daily lives.
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FINTECH IN PRACTICE
The most talked-about (and most funded) fintech startups share the same characteristic: They are
designed to challenge, and eventually take over, traditional financial services providers by being
nimbler, serving an underserved segment of the population, or providing faster or better service.
For example, financial companies seek to cut credit card companies out of the online shopping
process by offering a way for consumers to secure immediate, short-term loans for purchases.
While rates can be high, affirm claims to offer a way for consumers with poor or no credit as a
way to secure credit and build their credit history.
Similarly, Better Mortgage seeks to streamline the home mortgage process with a digital-only
offering that can reward users with a verified pre-approval letter within 24 hours of applying.
GreenSky seeks to link home improvement borrowers with banks by helping consumers avoid
lenders and save on interest by offering zero-interest promotional periods.
For consumers with poor or no credit, Tala offers consumers in the developing world microloans
by doing a deep data dig on their smartphones for their transaction history and seemingly unrelated
things, such as what mobile games they play. Tala seeks to give such consumers better options
than local banks, unregulated lenders, and other microfinance institutions.
In short, if you have ever wondered why some aspect of your financial life was so unpleasant (such
as applying for a mortgage with a traditional lender) or felt like it wasn’t quite the right fit, fintech
probably has (or seeks to have) a solution for you.
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FINTECH’S EXPANDING HORIZONS
In its most basic form, fintech unbundles financial services into individual offerings that are often
easier to use. The combination of streamlined offerings with technology allows fintech companies
to be more efficient and cut down on costs associated with each transaction.
If one word can describe how many fintech innovations have affected traditional trading, banking,
financial advice, and products, it’s “disruption”—a word you have likely heard in commonplace
conversations or the media. Financial products and services that were once the realm of branches,
salespeople, and desktops are now more commonly found on mobile devices.
For example, the mobile-only stock trading app Robinhood charges no fees for trades, and peer-
to-peer (P2P) lending sites like Prosper Marketplace, LendingClub, and OnDeck promise to reduce
rates by opening up competition for loans to broad market forces. Business loan providers such as
Kabbage, Lendio, Accion, and Funding Circle (among others) offer startup and established
businesses easy, fast platforms to secure working capital. Oscar, an online insurance startup,
received $165 million in funding in March 2018. Such significant funding rounds are not unusual
and occur globally for fintech startups.
This shift to a digital-first mindset has pushed several traditional institutions to invest heavily in
similar products. For example, investment bank Goldman Sachs launched consumer lending
platform Marcus in 2016 in an effort to enter the fintech space.
That said, many tech-savvy industry watchers warn that keeping apace of fintech-inspired
innovations requires more than just ramped-up tech spending. Rather, competing with lighter-on-
their-feet startups requires a significant change in thinking, processes, decision making, and even
overall corporate structure.
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FINTECH AND NEW TECHNOLOGIES
New technologies, such as machine learning/artificial intelligence (AI), predictive behavioral
analytics, and data-driven marketing, will take the guesswork and habit out of financial decisions.
“Learning” apps will not only learn the habits of users but also engage users in learning games to
make their automatic, unconscious spending and saving decisions better.
Fintech is also a keen adapter of automated customer service technology, utilizing chatbots and AI
interfaces to assist customers with basic tasks and keep down staffing costs. Fintech is also being
leveraged to fight fraud by leveraging information about payment history to flag transactions that
are outside the norm.
Fintech and new technologies are in a symbiotic relationship, constantly pushing the boundaries
of what's possible in the financial world. Here's a deeper dive into how new technologies is shaping
the future of fintech:
1. Artificial Intelligence (AI):
• Automated financial services: AI powers chatbots for 24/7 customer support, automates
loan applications and approvals, and even personalizes investment strategies.
• Fraud detection and risk management: AI algorithms analyze vast amounts of data to
identify suspicious activity and prevent financial fraud in real-time.
2. Big Data and Analytics:
• Hyper-personalized financial products: By analyzing financial data and user behavior,
fintech companies can offer highly personalized financial products and services
tailored to individual needs.
• Improved credit scoring: Big data allows for alternative data points to be considered
beyond traditional credit scores, potentially increasing access to credit for underserved
populations.
3. Blockchain Technology:
• Secure and transparent transactions: Blockchain offers a tamper-proof record-keeping
system, potentially revolutionizing digital payments, asset management, and cross-
border transactions.
• Smart contracts: These self-executing contracts powered by blockchain automate
financial agreements, reducing transaction costs and increasing efficiency.
4. Cloud Computing:
• Scalable and cost-effective solutions: Cloud computing allows fintech companies to
offer secure and scalable solutions without the need for massive upfront infrastructure
investments.
• Global reach: Cloud-based solutions enable fintech companies to reach a wider
audience and provide services across geographical boundaries.
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5. Internet of Things (IoT):
• Frictionless payments: Imagine making payments automatically using connected
devices, like your car paying for tolls or your refrigerator reordering groceries with
auto-payment.
• Personalized insurance: Wearable devices tracking fitness levels could lead to
personalized insurance premiums based on your health data (subject to privacy
regulations).
The Future of Fintech:
The constant evolution of technology promises even more exciting advancements in fintech:
• Open Banking: Securely sharing financial data with third-party applications could lead to
a surge of innovative financial products and services.
• RegTech (Regulatory Technology): Utilizing technology to streamline compliance
processes can benefit both financial institutions and regulators.
• The Rise of Decentralized Finance (DeFi): DeFi leverages blockchain technology to create
peer-to-peer financial services, potentially bypassing traditional financial intermediaries.
The Bottom Line:
New technologies are the fuel that propels fintech forward. As these technologies continue to
develop, we can expect even more groundbreaking innovations that transform the way we manage,
invest, and interact with our money.
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FINTECH LANDSCAPE
Since the mid-2010s, fintech has exploded, with startups receiving billions in venture funding
(some of which have become unicorns) and incumbent financial firms either snatching up new
ventures or building out their own fintech offerings.
North America still produces most of the fintech startups, with Asia a relatively close second,
followed by Europe. Some of the most active areas of fintech innovation include or revolve around
the following areas (among others):
• Cryptocurrency (Bitcoin, Ethereum, etc.), digital tokens (e.g., non-fungible tokens, or
NFTs), and digital cash. These often rely on blockchain technology, which is a distributed
ledger technology (DLT) that maintains records on a network of computers but has no
central ledger. Blockchain also allows for so-called smart contracts, which utilize code to
automatically execute contracts between parties such as buyers and sellers.
• Open banking, which is a concept that proposes that all people should have access to bank
data to build applications that create a connected network of financial institutions and third-
party providers. An example is the all-in-one money management tool Mint.
• Insurtech, which seeks to use technology to simplify and streamline the insurance industry.
• Regtech, which seeks to help financial service firms meet industry compliance rules,
especially those covering Anti-Money Laundering and Know Your Customer protocols
that fight fraud.
• Robo-advisors, such as Betterment, utilize algorithms to automate investment advice to
lower its cost and increase accessibility. This is one of the most common areas where
fintech is known and used.
• Unbanked/underbanked services that seek to serve disadvantaged or low-income
individuals who are ignored or underserved by traditional banks or mainstream financial
services companies. These applications promote financial inclusion.
• Cybersecurity. Given the proliferation of cybercrime and the decentralized storage of data,
cybersecurity and fintech are intertwined.
• AI chatbots, which rose to popularity in 2022, are another example of fintech’s rising
presence in day-to-day usage.
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AREA OF DESCRIPTION
EXAMPLES
INNOVATION
Cryptocurrency & Digital currencies and distributed ledger Bitcoin, Ethereum,
Blockchain technology enabling secure and Ripple, Decentralized
transparent financial transactions. Finance (DeFi)
applications.
Open Banking Fostering data sharing between financial Plaid, Yodlee, Finicity.
institutions and third-party providers to
create a connected ecosystem.
InsurTech Utilizing technology to streamline Lemonade, Zebra
insurance processes, risk assessment, and Insurance, Clover
customer service. Health.
RegTech Technology solutions that assist financial AMLbot, KYC.com,
institutions in complying with regulations Jumio.
like Anti-Money Laundering (AML) and
Know Your Customer (KYC) protocols.
Robo-advisors Automated investment platforms using Betterment,
algorithms to manage investment Wealthfront, Schwab
portfolios at a lower cost. Intelligent Portfolios.
Unbanked/Underbanked Fintech solutions catering to individuals Branch International,
Services with limited access to traditional financial Airtel Money, Tala.
services.
Cybersecurity Protecting financial data and systems from F-Secure, CrowdStrike,
cyberattacks in the digital age. Bitdefender
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Top 200 Fintech Companies Revolutionizing the World of Finance
Advances in data analytics, artificial intelligence, blockchain, and mobile technologies have
provided top fintech companies with a powerful toolkit to innovate and disrupt traditional financial
systems. These companies are not merely adapting to change; they are actively driving it.
In a moment when technological progress seems limitless, the financial sector is experiencing a
profound transformation, and 200 Fintech companies are leading this change and reshaping our
relationship with money.
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FINTECH USERS
There are four broad categories of users for fintech:
• Business-to-business (B2B) for banks.
• Clients of B2B banks.
• Business-to-consumer (B2C) for small businesses.
• Consumers.
Trends toward mobile banking, increased information, data, more accurate analytics, and
decentralization of access will create opportunities for all four groups to interact in unprecedented
ways.
As for consumers, the younger you are, the more likely it will be that you are aware of and can
accurately describe what fintech is. Consumer-oriented fintech is mostly targeted toward Gen Z
and millennials, given the huge size and rising earning potential of these generations.
The world of Fintech caters to a wide range of users, impacting various aspects of finance. Here's
a breakdown of the key user groups:
1. Businesses:
Traditional Financial Institutions (Banks, Insurance Companies): Fintech provides them with tools
to streamline back-end operations, enhance customer experience with mobile banking and online
services, and potentially offer new products like robo-advisory.
Small and Medium-sized Enterprises (SMEs): Fintech solutions like online lending platforms
make it easier for SMEs to access funding, while mobile payment solutions can simplify customer
transactions.
2. Consumers:
Retail Investors: Robo-advisors, fractional share investing platforms, and user-friendly investment
apps empower individuals to manage their investments more actively.
Everyday Users: Mobile banking apps, peer-to-peer payment apps, and personal finance
management tools make everyday financial tasks like bill payments, money transfers, and
budgeting easier and faster.
The Underbanked: Fintech solutions like mobile money reach those without access to traditional
banking services, promoting financial inclusion.
3. Other Stakeholders:
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Governments: Regulatory technology (RegTech) simplifies compliance processes for financial
institutions, while blockchain technology can potentially streamline cross-border transactions.
Fintech Startups: These innovative companies develop and offer new financial products and
services, fostering competition and driving innovation in the industry.
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EVOLUTION OF FINTECH
The evolution of FinTech (Financial Technology) drastically transformed the way traditional
financial institutions – insurers and banks functioned. To thrive, global companies, retailers, and
large tech giants realized the need to reinvent the value chain of financial services.
It all started in the 20th century with the launch of Fedwire in the USA (1918), the world’s first
electronic fund transfer system. The 1950s saw the birth of credit cards to ease the burden of
carrying cash everywhere. Then came the launch of the first ATM by Barclays Bank in 1967. This
led to e-commerce and online banking development in the 1990s.
All of this came crashing down in the 21st century with the Global Financial Crisis in 2008. The
era created a power vacuum, building a conducive environment for new FinTech startups and the
new banking sectors to grow.
However, the most rapid and transformational change in FinTech happened in the last decade.
Following is a glimpse of it:
1. 2011-2012: This period saw the rise of smartphones and mobile internet (2G/3G), getting
distributed worldwide. Thus, leveling the field for FinTech to thrive.
2. 2013-2014: This period embarked on the journey to cashless payments. Mint and PayPal
pioneered and dominated the e-payment market of the FinTech Industry.
3. 2014-2018: This period saw the growth of many subcategories of FinTech, such as
RegTech, Instant Loans, BNPL application, etc.
4. 2018-2019: With growing regulatory norms, client transparency and finance literacy were
advocated with email notifications and SMS updates, amongst others.
5. 2020-Till Now: The world came to a halt during the pandemic. With digitalization now
becoming a necessity, many novel concepts like Digital Bank, InsurTech and PropTech,
crowdfunding, and Cloud Security have now become a reality.
In a recent interview, the CEO & Co-Founder of Techwave, Mr. Raj Gummadapu, assures us that
the future of finance is more customer-friendly, non-traditional, and overlapping. He described
this by saying, “Fintechs are becoming a replacement for many proprietary legacy systems. More
co-development and joint ventures are expected in multiple sectors and industries where there are
some historical inefficiencies and expenses.”
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REGULATION AND FINTECH
Financial services are among the most heavily regulated sectors in the world. As such, regulation
has emerged as the number one concern among governments as fintech companies take off.
According to the U.S. Department of the Treasury, while fintech firms create new opportunities
and capabilities for companies and consumers, they are also creating new risks to be aware of.
“Data privacy and regulatory arbitrage” are the main concerns noted by the Treasury. In its most
recent report in November 2022, the Treasury called for enhanced oversight of consumer financial
activities, specifically when it comes to nonbank firms.
Regulation is also a problem in the emerging world of cryptocurrencies. Initial coin offerings
(ICOs) are a form of fundraising that allows startups to raise capital directly from lay investors. In
most countries, they are unregulated and have become fertile ground for scams and frauds.
Regulatory uncertainty for ICOs has also allowed entrepreneurs to slip security tokens disguised
as utility tokens past the U.S. Securities and Exchange Commission (SEC) to avoid fees and
compliance costs.
Because of the diversity of offerings in fintech and the disparate industries it touches, it is difficult
to formulate a single and comprehensive approach to these problems. For the most part,
governments have used existing regulations and, in some cases, customized them to regulate
fintech.
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WHAT ARE EXAMPLES OF FINTECH?
Fintech has been applied to many areas of finance like:
• Robo-advisors are apps or online platforms that optimally invest your money
automatically, often for little cost, and are accessible to ordinary individuals.
• Investment apps like Robinhood make it easy to buy and sell stocks, exchange-traded
funds (ETFs), and cryptocurrency from your mobile device, often with little or no
commission.
• Payment apps like PayPal, Venmo, Block (Square), Zelle, and Cash App make it easy to
pay individuals or businesses online and in an instant.
• Personal finance apps such as Mint, YNAB, and Quicken Simplifi let you see all of your
finances in one place, set budgets, pay bills, and so on.
• Peer-to-peer (P2P) lending platforms like Prosper Marketplace, LendingClub, and
Upstart allow individuals and small business owners to receive loans from an array of
individuals who contribute microloans directly to them.
• Crypto apps, including wallets, exchanges, and payment applications, allow you to hold
and transact in cryptocurrencies and digital tokens like Bitcoin and non-fungible tokens
(NFTs).
• Insurtech is the application of technology specifically to the insurance space. One example
would be the use of devices that monitor your driving in order to adjust auto insurance
rates.
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CONCLUSION
The financial technology (fintech) revolution is rapidly reshaping the way we manage our money.
By leveraging cutting-edge technologies, fintech companies are offering innovative solutions that
are not only more convenient and efficient but also more accessible and inclusive. From mobile
banking apps to robo-advisors and cryptocurrency, fintech is making financial services more user-
friendly and empowering individuals to take control of their financial well-being.
However, as the fintech landscape continues to evolve, regulators will need to strike a balance
between fostering innovation and mitigating potential risks. Collaboration between governments,
financial institutions, and fintech companies will be crucial to ensure a secure and prosperous
future for the financial industry.
Looking ahead, the future of fintech is brimming with possibilities. As new technologies like
artificial intelligence and blockchain mature, we can expect even more transformative solutions
that will redefine the way we interact with and manage our finances. Fintech has the potential to
democratize finance, making financial products and services universally available and affordable.
In conclusion, fintech is not just a trend; it's a fundamental shift in the financial landscape, and its
impact will continue to be felt for years to come.
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REFERENCES
• Financial Technology (Fintech): Its Uses and Impact on Our Lives Investopedia
• What is fintech? 6 main types of fintech and how they work Plaid
• Fintech - Wikipedia Wikipedia (https://en.wikipedia.org/wiki/Fintech
• https://finnovating.com/news/top-200-fintech-companies-2023/
• https://techwave.net/the-rise-of-fintech-how-is-it-revolutionizing-the-future-of-finance/
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