From FinTech to TechFin: The Regulatory Challenges of Data-Driven Finance

Zetzsche, Dirk Andreas; Buckley, Ross P.; Arner, Douglas W.; Barberis, Jànos

doi:10.2139/ssrn.2959925

Cited by 98 publications

(65 citation statements)

References 5 publications

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“…Therefore, wrong assumptions lead to a misunderstanding of the ecosystem and this finally lead to wrong strategies for actors in the business ecosystem. Our analysis of the business model regarding business areas and data, as two important elements of the business ecosystem of fintechs [25], [26], combines both mentioned research areas. In case of a business ecosystem view the business areas of fintechs have to be extended to the seventeen identified business areas and should not be limited to single ones.…”

Section: Discussionmentioning

confidence: 99%

“…Following our research question and focus, we searched for extensions to business model approaches that emphasize business areas and data as fundamental elements of a business ecosystem beside further elements like government, financial customers and traditional financial institutions [25], [26]. Several authors suggest Data-as-a-service and Analytics-as-aservice as new service types [27].…”

Section: Related Researchmentioning

confidence: 99%

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Charting the Emerging Financial Services Ecosystem of Fintechs and Banks: Six Types of Data-Driven Business Models in the Fintech Sector

Schmidt¹,

Drews²,

Schirmer³

2018

Proceedings of the 51st Hawaii International Conference on System Sciences

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The competition and the collaboration of established banks and challenging fintechs are expected to dramatically change the financial services ecosystem. The different types and roles of fintechs as new niche players in the ecosystem are not well understood so far. However, a better understanding of these types and roles is required for incumbent as well as for new actors for defining and aligning their strategies. In this paper, we analyze the business models of 195 fintech companies with a special focus on the role of data. Based on this analysis, we present a structured overview of fintechs' business areas as well as six data-related business model types. This paper contributes to the research on data-driven business models and business ecosystems by applying and modifying an existing approach for classifying new niche players based on the data dimension of their business models.

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Section: Discussionmentioning

confidence: 99%

Section: Related Researchmentioning

confidence: 99%

Charting the Emerging Financial Services Ecosystem of Fintechs and Banks: Six Types of Data-Driven Business Models in the Fintech Sector

Schmidt¹,

Drews²,

Schirmer³

2018

Proceedings of the 51st Hawaii International Conference on System Sciences

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“…59 What more clearly embodies the idea of alternative financing channels is the intermediation taking place on P2P platforms. 60 While this market is heterogeneous and characterised by different business models, 61 the purpose of this section is to highlight the main risks that emerge from the operation of the main P2P platforms. It is worth looking at Zopa, which is probably the first company to have adopted a business model grounded on the direct online-based matching of people looking for a loan on the one hand, with those looking for an investment on the other.…”

Section: Business Models and Emerging Risksmentioning

confidence: 99%

The promise and perils of alternative market-based finance: the case of P2P lending in the UK

Bavoso

2019

J Bank Regul

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The collapse of the global financial industry in 2008 and the subsequent decay of most Western economies into a period of prolonged economic stagnation have represented a springboard for the progressive growth of alternative channels of financial intermediation. The reluctance and inability of mainstream banks in the post-crisis years to provide credit facilities to the real economy, most critically to start-ups and small and medium-sized enterprises, propelled the latest wave of financial innovation, this time under the guise of FinTech. Much has been written on the rise of FinTech in recent years, but there is still insufficient clarity about the benefits that this phenomenon is bringing to the real economy and the potential risks that can arise from its growth. This paper maps the development of FinTech lending platforms in the UK and reconceptualises the rationale for their growth. In doing that, this study focuses on the structure and operation of the main UK platforms, recognising that while some are effectively banks that adopt a technology-based business model, many platforms operate under the P2P business model. The question then is to assess the policy and regulatory approach that is relevant to UK P2P platforms. Interestingly, the emergence of P2P securitisation raises a number of regulatory and policy questions, because longer intermediation chains typical of securitisation may well defy the social and economic purposes under which the idea of P2P developed. Furthermore, questions of systemic risk inevitably resurface in these types of transactions. Ensuing problems related to the best way to regulate these new channels of financial intermediation lead to critically evaluate the initiatives launched by the UK FCA, initially under the Innovation Hub, and more recently under the consultation for a new regulatory framework.

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“…The current rapid speed of technology through artificial intelligence and machine learning and the fast growth of new entrants in the financial sector (Zetzsche et al 2017) are adding to the challenges that regulators face. However, regulators should not have a hands off approach since firms can take advantage of some aspects of innovation and the inherent complexity to exploit uninformed investors (Henderson and Pearson 2011).…”

Section: Financial Markets Innovation and Regulationmentioning

confidence: 99%