The Fintech

Fintech Investment Financial Internet Technology Concept. Light bulb on tablet and Stock graph and business technology icon with abstract stock graph and electronic circuit background , copy space

Fintech? What does that mean? Do you know? According to a very recent Harris Interactive survey conducted for Deloitte, about 83% of French people do not know what Fintech means. And only 4% of the French know “roughly” what this means, it should be noted that they are as much to think that the term Fintech refers to fitness.

On the same model as his fellow Biotech, the term Fintech is the contraction of finance and technology. This term includes startups that reinvent finance through technology. Fintech appeared in the 1980s/1990s on the side of our Anglo-Saxon friends. But the real boom appeared after the 2007 crisis and initially on the financial services side to provide efficient, fast, and above all more competitive financial services. 2015 is the year in which the general public met Fintech thanks to an explosion in the amounts invested in start-ups by major financial players and preceded by venture capital funds.

It should be noted that there are different categories of Fintech

We distinguish BtoC, Business-to-Consumer, which concern the general public such as the new banks that allow you to have an account and a credit card with very few fees, online jackpot such as Leetchi or LePotCommun, money transfer applications such as Lydia or Pumpkin, etc.

Then come the BtoB, Business-to-Business, which instead of offering services to individuals, offer services to companies of all sizes. We find here Kantox or dematerialized factoring (Finexkap).

Another important category is BtoBtoC, Business-to-Business-to-Consumer, here we refer to Fintech which puts professionals by involving individuals. Examples can be given of crowdfunding solutions for companies with financing from private individuals.

Finally, there are Insertech which operate in the insurance sector or Regtech which provide services to banking players.

The turn was therefore taken for the Fintech, and it was very well taken by China which has an ultra dominant position. Indeed, China has 13 Fintech companies valued at more than one billion dollars, with a value of nearly 112 billion dollars. China is the leader because Fintech has become the most popular segment with 2,500 lending platforms for a total volume of 300 billion dollars in loans. But this sector is evolving rapidly because it is driven by the regulatory environment, the solidity of the domestic economy and e-commerce and of course the high rates of investment.

Investments have not only increased in China but in the rest of the world. A recent study shows that the Fintech sector continues to grow, despite increased market instability. There are 39 Fintech with a capital of more than 1 billion dollars, and it should be noted that 5 have reached this valuation in 2016. But where are the banks in this shift, because they are the first to be affected? Indeed, it is they in the first place who will suffer from Fintech, because the latter can bring a lot of transparency to the draft tariffs of traditional banks. A fan of the “freemium”, the Fintechs offer and will soon offer equal treatment to banks with much lower prices. In addition, the European reform of payment services (DSP2) is very soon to come, which will push banks into the era of open banking, forcing banks to open their data to all Fintech players.

But banks are not fools, and for some they have taken the Fintech turn. Like HSBC, for example, which collaborated with Linxo to develop its personal finance management service: HSBC Personal Economy, which was a good idea because it enabled it to move much faster than if it had developed it itself. It does not stop there, because HSBC has also created a venture capital arm, HSBC Strategic Investment, which allows it to invest in start-ups with which it could work, this is a $50 million envelope.

The threat of Fintech is therefore very present for traditional financial actors, but they have been well armed and have succeeded for the majority in taking the wave of Fintech.

Nicolas Viguier


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