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Fintech: When are you talking about Fintech?

You may have heard about Fintech: startups reinventing finance with technology. Sometimes pushing the established actors of the sector. If you have not heard of it yet, you are at the right place. Franck Peltier will provide a detailed definition to better understand the issues around this new phenomenon.
A contraction of finance and technology, the term “Fintech” appeared for the first time in the years 1980-90 in the specialized Anglo-Saxon press. It really spread after the 2008 financial crisis outside the world of finance to describe innovative companies, rather young, using the technologies of digital, mobile, artificial intelligence, etc., to provide services more efficiently and cheaply. These are generally start-ups, even if historical players in payment or banking software sometimes come under this new term.
2015 is surely the year in which Fintech became mainstream, with an explosion of the amounts invested by venture capital funds in startups in the sector, followed by the major established players in finance: $ 47 billion had been invested that year in the startups of the sector.
However, according to a recent Harris Interactive survey for Deloitte, 83% of French people do not know the term Fintech, and only 4% know “pretty much” what it is (they are as much to be confused with ” fitness “…). They sometimes use them without knowing it.

The different types of Fintech

There are usually several categories of Fintech:

The BtoC Fintech (business-to-consumer)

Which is aimed at the general public, for example the 100% digital “neobanks”, without an agency, which offer an account and a low cost payment card (Compte Nickel, Morning), online pools like Leetchi or LePotCommun, payment applications like Lydia or personal finance management (Bankin, Linxo), as well as wealth management tools (dashboard like Grisbee) or automated investment (robo advisors like Marie Quantier);

The BtoB fintech (business-to-business)

offering financial services to companies, SMEs or large accounts, such as online currency transfer (Kantox) or paperless factoring (Finexkap);

The BtoBtoC Fintech (business-to-business-to-consumer)

like the crowdfunding platforms, which connect project leaders, creators, retailers, SMEs, and investors, individuals or professionals: crowdfunding in gifts with or without rewards (KissKissBankBank, Ulule), crowdlending (SME loans, such as Lendix and crowdequity (capital financing, such as Sowefund);

Insurtech, in insurance

From comparator, like Fluo, to collaborative insurance like Inspeer or Otherwise, and 100% digital health insurance, like Alan;

Regtech

Companies that offer technological solutions to meet the regulatory and compliance constraints of banking players mainly (especially in customer knowledge or “KYC” in the jargon) such as Fortia or Neuroprofiler.

Fintech in Africa

In 2030, according to Bill Gates, two billion people around the world will use their mobile phones to save, borrow and make payments. Banking innovation is therefore a new space for conquering African startups.
In Africa, thanks to FinTech technologies, mobiles have become a powerful tool for e-inclusion, which, in the absence of banking infrastructure, makes it possible to receive wages and pay them out of the informal sector. the African population, absent from official statistics.

Fintech: But what is it?

Combining the terms “finance” and “technology”, FinTech is an innovative start-up that uses technology to rethink financial and banking services. Following the economic crisis of 2008, many bankers and traders left the major financial centers of the planet and embarked on entrepreneurial adventures to rethink the model of finance through technological innovation. With the aim of making finance simpler and more accessible by offering better and cheaper services. In ten years, the banking sector has experienced more changes than in 200 years. FinTech is developing in all areas, from savings management to loans for individuals, through corporate financing or online payment.
After disrupting the music, press or tourism sectors, new technologies seem to be creating a new revolution, this time in the banking and financial sector. An explanation by Franck Peltier.

The different classes of FinTech

Crowdfunding

The first of the family and the most publicized, is the “crowdfunding” via a dedicated platform, individuals can finance business projects or artistic creation. This financing may take the form of a donation (with or without a material counterpart), a participation in the equity of the company or an SME loan (crowdfunding). This is the case of Bolden, an alternative credit platform that allows you to pay less than 3%.

P2P lending

Crowdlending is also the “P2P lending” (loans from individuals to individuals). This is the case of the site Prosper.com, created in 2005 in California, which allows individuals to apply for consumer loans or lend money without going through the traditional channel of banks.

Mobile applications and platforms

Consists of mobile applications and platforms that allow you to manage your banking activities, be it the control of your expenses or your investment choices. For example, eToro is the first social trading network that allows users to track and copy the investments of other network members.

Virtual currencies

The third family concerns virtual currencies, the best known of which is the Bitcoins system, especially in the “Deep Web”. But monetary exchange systems have also developed on the social network Facebook, the Facebook Credits, and on the virtual game Second Life, the Linden Dollars.

Electronic Payment via Smartphone

Finally, the last category concerns electronic payment via smartphone and on the Internet, at merchants or on e-commerce platforms. This is particularly the case of a system such as PayPal, the most famous, which allows to pay for purchases or receive money securely, without having to transmit its bank details. The Square service, available in the United States, Japan and Canada, allows him to pay for purchases directly with his smartphone in stores.
This list is not exhaustive and the number of FinTech continues to grow and develop in more and more areas.

FinTech is a growing industry

All traditional sectors have seen their business models turned upside down by the Internet revolution: after Amazon for distribution, Blablacar for transport, Uber for taxis or Airbnb for rentals, it is the turn of the banking sector to be challenged by new technologies.

New technologies at the service of finance

The capitalist system is based on finance. This area has gained momentum because of the globalization that is transforming the financial system through new technologies. International finance therefore becomes a facilitator of proper allocation of capital, and promoting economic development in each country. New technologies are innovating the financial sector, allowing for mobility of financing. In other words, financial operations are no longer the way they were. That is one subject Franck Peltier works on in Singapour.

Finance and Technology

Financial operations are conducted in several ways including loans, grants, and payment methods.
Companies, in order to finance their development projects, issue shares on the stock market at the expense of bank loans.
Previously, the stock market was a meeting place for buyers and sellers. It was therefore considered a market where listed companies were going to meet investors. These meeting, called trading sessions, made it possible to determine stock prices.
Nowadays, this method was obsolete, because the transactions were dematerialized thanks to the advent of digital technology. Exchanges are now computerized. No more physical encounter between the partners.
We also have the Bitcoin system that promotes the use of virtual currency. We are witnessing lightning-quick new payment methods. The physical world is being brushed aside by the digital world. Payments and financial transactions are now conducted through mobile applications, computer use (purchases, reservations, bank transfers, use of bank cards, etc.).
Remittances are now remote.
These new technologies and digital imaging are therefore changing financial systems in order to facilitate the activities and financial transactions, and thus gain time. !

Fintech is shaking up old habits in finance and IT

One thing is for sure, Fintech startups, which have taken it upon themselves to reinvent the world of finance with the help of technology, are a real threat to the financial sector. I’s a sad statement made by Franck Peltier. Since making their appearance, they have been truly competing with traditional financial stakeholders, such as insurance companies and banks. As a result, these institutions are left with no choice but to reinvent and modernize themselves so as to remain relevant!

The Place of Fintech in the financial and IT sectors

It comes as no surprise that Fintech startups are present in more than half of the financial sector. The development of IT tools with advanced technology promotes their integration in the industry, allowing them to compete with the main stakeholders of the industry.
Thus the Fintech operate in several categories, like neo-banks. These institutions are not traditional banks. They operate like crowdfunding platforms, and use methods such as crowdfunding, crowdlending and crowdequity to link investors, project developers, SMEs, etc.
Moreover, Fintech also operate in the financial sector by providing financial services to major companies in the sector, SMEs or large companies, through the development of computer technology.
In addition, they also offer technological solutions. With the development of technology and the digital world, the Fintech today also offer innovative technological solutions to different problems of the actors of the financial sector.
Banks are the main beneficiaries. These solutions are the answer to all the constraints that they face, particularly in terms of regulation. They must comply with it to develop and modernize themselves.
It is no fluke that these startups are able to grow in the financial sector, and compete with the main stakeholders thererof.

Fintech banking, finance and insurance

Fintech, which refers both to financial technology on the one hand and startups operating in this area on the other hand, is also a new financial industry style said to me Franck Peltier the other day. It has undergone rapid development since the crisis of 2008. Ever since, it has been enriching the financial sector with technological innovation. The goal here is to facilitate access to finance, making it more accessible thanks to cheaper and high quality services. So it is no surprise that it has managed to carve out a place for itself at the top. Fintech is present in all areas, ranging from banking and finance, to insurance!

Fintech and banks

It wouldn’t be wrong to point out that Fintech is a great competitor for traditional banks. With the digital age, it would be a shame for these institutions to continue in traditionalism without modernizing their methods and getting abreast of new technologies.
Fintech is a reminder for these institutions to think about innovation. The services it offers are certainly complementary to those offered by banks. However, Fintech services have the advantage of being modern and provide added value to traditional services.
Banks would therefore be well-advised to draw inspiration from Fintech companies, or else set up win-win partnerships with them.

Fintech and insurance

The insurance industry is not left out! After the banking sector, there is no other more traditional and conservative sector than that of insurance, and Fintech has crept into this sector as well!
The digital innovation they bring to this sector benefits the insurer. For example, they have more freedom to act as the digital allows them to dematerialize their documentation, reduce management costs, improve customer relationships, optimize risk management, etc.

And that’s what concluded my exchange with Franck Peltier.

Finance and Technology

The advent of technology has revolutionized many areas, recognized Franck Peltier, and finance is no exception to this. Most major financial institutions today use digital technology or digital strategy to develop and bring added value to their business! Well, yes, more and more people today are using the Internet, even to perform their financial transactions. It is therefore quite normal that the financial sector is dragged into the mix!