All about fintech

  • Exploring fintech landscape and business models
  • The growth of fintech


Despite a vogue in and around media and technology circle, the buzzword ‘fintech’ is still misapprehended by many, including tech-savvy professionals. Fintech is basically a blend of two words ‘financial’ and ‘technology’ that applies to an innovative and emerging technology in financial services or financial aspects of a business that helps companies to deliver in fast and new ways. This can be in the form of the latest software or a process, application or a novel business model.

What is fintech?

  • A consumer shop online; e-commerce website and bank use fintech.
  • A wealth advisory service company’s use of robo-advisors for client’s asset management is fintech.
  • A consumer transfers money online via mobile from one bank to other and the bank uses fintech for such transactions.
  • An applicant for a housing loan, apply online for best interest rates and receives an approval within minutes also falls under the category of fintech.


Fintech is broadly defined as a technological innovation applied and used in financial services sector. This is transforming the financial industry by creating an advanced financial ecosystem, which enhances the quality of services offered, saves time and help in cost optimization.

The financial crises (2008-09) led to the birth of fintech companies with inventions comprising analytics, e-finance and social networking. Fintech startups gained attention by offering innovative and data-driven personalised services.

The terminology and jargon are defined below for a better understanding of the sector.

Pillars of fintech ecosystem

Fintech can be defined as a technology-based business that competes, enable and/or collaborate with financial institutions (Source: Fintech in India, 2016-KPMG and NASSCOM).

Fintech companies engage with financial institutions, technology vendors, consultants and government agencies to create an integrated ecosystem that brings technology, expertise and facilities all the entities through a common platform. In the current era of tech-driven financial services, growth and market success of a fintech depends on successfully integrated ecosystem where all are well connected and participants share ideas and convert opportunities into businesses.

Fintech landscape

Fintech is shaping new financial service experiences with technological developments and depending on the diversification in the financial sector few new business models have arisen. The next generation payments, automated wealth management, robo-advisors, P2P lending, insurance technology, capital markets are prominent examples. These fintech models changed traditional approaches to conduct businesses both at B2B (business to business) and B2C (business to customer) levels. Moreover, several companies embraced these transforming business models, which, in turn, enhanced efficiencies with regard to time, money and benefited their customers.

Fintech companies are broadly segmented below, these were able to add value by providing enhanced accessibility, convenience and tailored products.


Payment fintech is a relatively simple business model among the others and facilitate digital payments at a low cost. Payment fintech may cater to retail and customer payment market and/or corporate and wholesale market by offering ease and simplicity of instant payments at low costs. Payments, one of the most used (and least regulated) retail financial services on a daily basis, include mobile wallets, peer-to-peer (P2P) mobile payments, foreign exchange and remittances, real-time payments and digital currency solutions. These services improve customer experience in form of speed, convenience and multi-channel accessibility. The popular mobile payment applications, such as Google Wallet and Apple Pay are convenient and secure to use.



P2P lending fintech provide an efficient platform to individuals and/or businesses to lend and borrow on a mutually agreed rate of interests. Lending fintech can be a P2P consumer lending and/or P2P business lending. Further, due to efficient structure these fintech’s do not directly get involved but match a right lender with a right borrower by charging a minimal fee, these are able to offer low-interest rates and direct improved lending process as compared to banks.



Crowdfunding fintechs are facilitators between entrepreneurs or initiators that require funding for development of a new product/service or cause and the ‘contributors’, individuals and/or businesses, which are interested in supporting a project. These fintechs allow contributors to access information on different initiatives and funding opportunities for the development of products/services. The rewards-based crowdfunding, donation-based crowdfunding and equity-based crowdfunding are some of the business models for crowdfunding fintechs.

Wealth management

Automated wealth managers or robo-advisors that provide automatic financial advice by use of algorithms and suggests a mix of investment based on customer’s requirement in a fraction of cost are most popular fintechs apart from capital market fintech. Capital market fintech allow investors or traders to connect with each other to buy or sell stocks, commodities in real time at minimised risk and cost. 


Insurance fintech enables insurers to have a more direct relation with customers through the use of data analytics to calculate, mitigate risk and offer the best suitable insurance products to meet customer’s need. Furthermore, technology also allows smooth and streamlined processes right from buying a policy online to billing and claim.

Growth in fintech

Fintech companies are having a significant impact on the financial services industry as ~83% of financial institutions believe that various aspects of their business are at risk from fintech startups as per a report published by PwC (2016). Thus, financial firms are building in-house capabilities or investing in fintech startups to remain competitive. Similarly, customers are also embracing fintech companies with 50.2% (58.5% in Asia-Pacific) conceding globally that they do business with at least one non-traditional firm (Source: The World Fintech Report 2017; Capgemini). An increasing expectation from customers, reduced entry barriers, technological evolution and expansion of VC funding are few reasons for an astonishing growth of fintech financing in the last 6-7 years. 

*Financing include publicly announced equity capital raised for private fintech companies across the world and lending capital, IPOs, debt and other company spin-offs and secondary transaction are excluded

In 2016, fintech firms raised ~USD 28.4 billion worldwide from over 1,550 funding deals. Fintech companies have raised ~USD 18.2 billion from more than 1,160 deals as of September 2017. Investment in fintech companies is expected to grow at a CAGR of 7.1% and is estimated to reach USD 45 billion by 2020 (Source: KPMG-Fintech in India, 2016; Business Standard 2016).

Investment in fintech segments

Again in 2016, payment fintech companies attracted the highest financing with ~39% of the total funds raised by the entire fintech industry. While banking/lending sector fintech companies dominated the market with ~34.6% share in the total raised funds and saw the highest number of deals until YTD (year to date) September 2017. The banking/lending fintechs raised ~USD 6.3 billion (out of the total USD 18.2 billion financing) in 356 deals (out of the total 1,160 deals) in 2017 YTD followed by financial management solution fintechs and payments/e-commerce fintechs. 


Notably, Asia-Pacific emerged as a global leader in fintech startups left North America and Europe behind. Fintech companies in Asia-Pacific raised ~USD 14.9 billion in 2016, this was double from the previous year and almost 50% higher from North America. 

The surge in Asia was predominantly due to three big rounds of financing in China (2016). The funding of USD 4.5 billion in Ant Financial, USD 1.2 billion in and USD 1 billion in JD finance mostly contributed for an increase in numbers. Hence, with the above deals, China for the very first time surpassed the USA with a total of USD 7.7 billion of funding deals. The country also witnessed ~84% increase as compared to 2015 when the total funding value was USD 4.2 billion (Source: KPMG-Pulse of Fintech, 2016). The financing activity in the USA is on a decline primarily driven by political factors. On the contrary, a massive unbanked population, the rise of the middle class with disposable incomes, increasing smartphone penetration with the convenience of shopping online has helped Asian fintech to create new models of financial inclusion. The main areas of investment are payments and alternative lending that is still unmet through traditional financial institutions.

Lastly, apart from China, India is also gaining stride with digital banking and digital payments. The government’s initiatives for a digital system and unified payment interface is enabling India to step further towards the growth in the sector.

‘For more on the above read the next blog…‘Emergence, growth and potential of fintech in India’.


Your Rating

Slack set out to kill E-mail

Started as a side project for internal use in a gaming company High revenue growth with recurring revenues Went Public by offering shares through the Direct Public Offering ...

Tire manufacturing industry, analysing the cost and margin trends

The global market for tire manufacturing stands at $180 billion. Michelin anticipates the long-term demand to rise at the rate of 5 to 10% a year in developing markets and 1 to 2% a year in mature...

Rapidly growing Indian online food delivery industry and its unrealised profits

Evolution of online food delivery industry in India Geographical penetration and scope for expansion Key players and their zeal to balance revenue and costs   Online...

An analysis of Malaysian rubber glove industry

How big is the international rubber gloves market? Reasons behind the healthy and steady growth Malaysia’s role in the industry Why are companies struggling for stable...

Failure of Amazon in China, an analysis

E-commerce market in China Online consumer product retailers in China Performance of Amazon in China   Amazon is a global e-commerce player selling a wide...

Can lithium-ion anode demand for needle coke reduce availability for electrode players?

What is needle coke? Uses of needle coke Lithium-ion battery manufacturers demand needle coke   Needle coke? Needle coke is a specialised form of petroleum coke...

Is the radio broadcasting industry in the U.S. dying? An analysis

Radio, the most powerful medium of reach in the U.S. Why the industry is moving at a slow pace? Radio’s health is still sound, will it continue in the long-term?   ...

Carbon black industry, strong potential for supernormal profitability?

What is carbon black? Its uses Impact of the environmental curbs in China   What is carbon black? Carbon black is a fine carbon powder and it is a disorderly...

Housing finance market in India. Is affordable housing driving the growth?

Overview of the housing finance sector in India Key players dominating the segment and their dynamics Factors driving aggressive demand for housing   The housing...

Indian wood panel industry, growth drivers and present trends

Current market scenario in the Indian plywood industry Growth in the housing sector and rapid urbanisation to provide the boost GST rationalization to reduce price difference...

Sri Lankan economic and political crisis

Sri Lanka’s latest political crisis, who governs the nation? Poor economic indicators adding to the nation’s woes   Sri Lanka is currently embroiled in a political crisis,...

Blockchain, an emerging concept, a disruptive technology (Part 1)

What is blockchain? How is blockchain revolutionary? Cryptocurrency, the new money ICOs, the new way of raising money Summary Blockchain is a software architecture...

Rice industry outlook 2018

Major rice producers and consumers Global rice trade Factors dominating the trade   Rice is the 3 rd largest produced agricultural commodity in the world, after...

Rise of Ant Financial, will the success story continue?

What is Ant Financial? Journey to become king of unicorn Will regulatory curbs hinder its success journey?    Ant Financial, an affiliate and integral part...

Malaysian rubber glove industry, an update

Rising global demand for gloves Impact of USP 800’s implementation and the US-China trade war on Malaysia’s rubber gloves industry Key challenges for the Malaysian rubber...

Unnoticed growth of the media and entertainment industry in India

Overall industry brief Growth of the M&E industry and its segments Major supporting elements of this growth   Media and Entertainment (M&E) is a very wide industry...

Battle for the textile and apparel industry in Southeast Asia

The reasons for China’s decreasing presence in the industry Initiatives by the governments in Southeast Asia to boost the textile trade Vietnam and Bangladesh’s quest to conquer...

Baidu’s Apollo, the underdog of autonomous driving platform

Overview of the autonomous vehicle sector in the global automobile industry Search giant Baidu’s entry into the autonomous driving space Baidu’s approach in becoming a front-runner...

OYO Rooms, an Indian start-up to enter Japan

Growth story of OYO Rooms in India Business model of OYO Rooms Analysis of strategy to enter Japan   OYO Rooms, the Indian start-up has decided to venture in Japan...

Education industry in India, an overview

Growth of private universities in the nation Future potential of the education industry in India   The education sector in India is estimated to be worth USD 91.7 billion...