The document defines fintech companies as non-financial businesses that use digital technology and associated tools to provide financial services. It emphasises their potential to boost the efficiency of the finance industry and promote inclusion of all social groups.

It says that their features and value propositions focus on ease of access from any touchpoint, any time, any place. Their low costs enable them to reach groups of population that traditional banks do not cater for.

Although it posits that the millennials are behind the success of fintechs and the extension of mobile-phone usage for different transactions, it points to barriers to their growth in developed countries, such as their highly banked populations. It therefore augurs greater success in emerging markets, where the potential for growth is greater due to weak banking systems and a major percentage of the population being unbanked. In Latin America, more specifically, the report recognises the difficulty in digital data transmission.

It considers the role of governments to be important, as they must find the right trade-off between regulating these  entities and avoiding the risks they could entail while supporting innovation.  

Finally, it analyses cooperation between fintechs and banks, concluding that partnerships are good for both parties, obliging traditional banks to reinvent themselves.

 

You may be interested in:

• The future of microfinance in the Fintech (Rupert Scofield)
• Digital finance for all: powering inclusive growth in emerging economies (McKinsey & Company)
• “When microfinance goes digital: opportunities, challenges and dangers for microfinance institutions and their clients” (Máster Internacional en Microfinanzas para el Emprendimiento de la Universidad Autónoma de Madrid)