miércoles, 2 de septiembre de 2015

#Fintech : The digital disruption arrives to the financial sector

One of the buzzwords of 2015 is "fintech". The term summarizes the digitalisation of the financial sector and a new look at the way that information technology can enable access to new sources of financing for citizens and businesses and a more efficient management their financial capital. In a simple manner, the wikipedia defines "fintech" as a line of business based on using software to provide financial services.

The services included in the fintech sector is a moving target, not a surprise of a nascent sector. Without any doubt, we can include in the fintech category the services that involve e-payments, cryptocurrencies or electronic trading. But also analytics based on financial data or alternative funding through electronic means are usually included in the fintech sector. The excitement about fintech is due to its expected growth, however it is difficult to estimate the total economic value that would have such an extended sector. Nevertheless, available figures are impressing. For instance, alternative funding market is expected to reach 7 € billion per-year size in EU in 2015 and card payments reached 2.2 € trillion in 2013. The interest in this so-called "Fintech" companies is shown by some facts:


As in every economic sector, the established players in the financial sector are introducing digital technologies in order to modernise its operation. However, the most innovative fintech solutions come from the vibrant start-up scenario where companies move on the borders of the regulation and without the burden of legacy processes and technology. Furthermore, the synergies among the old and the new players are flourishing and some European multinational banks are creating venture capital funds for fintech companies. The result has been the appearance of an important pack of EU fintech startups. Nevertheless, more should be done to create the right conditions in Europe for promoting the creation and development of EU fintech companies.

Since the begin of the current legislative period, the European Commission has highlighted the importance of the digital economy for recovering growth and employment in Europe. However, no mention to the digitalisation of the European Capital market is included in the Digital Single Market Strategy. It should be said that important actions for the development of trust in the fintech sector are close to be concluded, as the approval of the EU data protection reform or the end of the negotiations of the new cybersecurity directive, but further actions are needed. The EU free data flow initiative that aims to ensure the free movement of data in the DSM could be an important driver in order to tear down the remaining barriers for  the development of the fintech sector.

No sector is immune to disruption in the digital era, even the more critical to the economy will need to adapt to new digital paradigm. In the 2008 recession the financial institutions were described as too big to fail. The disruption ahead maybe could solve us that problem also  the big players could explode in a galaxy of a 2nd generation of small tech financial companies with their own bank license. Or maybe not. Maybe the big players could grow even more absorbing the new players. The dices are on the table on the financial sector.

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