Fintech n. 1en

The development of FinTech


The development of FinTech
Opportunities and risks for the financial industry in the digital age

C. Schena, A. Tanda, C. Arlotta, G. Potenza

FinTech no. 1 - March 2018 [PDF]

The research analyses the operation of FinTech companies, highlighting the benefits and risks that their development generates in terms of competitive stimulus within the financial system and streamlining its operating mechanisms, broadening the accessibility of financial services for customers and improving the satisfaction of their financial needs, the correct and efficient allocation of financial resources to the benefit of economic growth, as well as the correct and transparent management of information and risks linked to financial services, especially when directed at retail investors.
First of all, the work qualifies the type of FinTech companies, clarifying the fact that they are a fully-fledged new component of the financial industry, since they perform financial activities using innovative technological solutions. FinTech, therefore, is a phenomenon that is developing within the financial services industry, in the wake of the more general process of creation of the digital economy.
In particular, the work highlights the product and process innovations introduced by these new financial operators, as well as the extensive areas of overlap or affinity identified on the operating plane for intermediation performed by traditional intermediaries and financial markets subject to supervisory rules. In addition, the analysis reveals the different business models adopted by FinTech companies, through the development of direct and indirect digitalised financial intermediation channels. Particular attention is also paid to the examination of risks linked to FinTech operation, as well as the critical aspects that may be identified with regard to both the management of the services offered and the fairness and transparency towards customers.
Overall, this paper makes a series of considerations that contribute to the on-going international debate on the opportunities and methods of regulating FinTech and that support the definition of a regulatory architecture that is more activity-based than today's more prevalent entity-based structure, which is not sufficient to ensure, on the one hand, neutral rules for the technological solutions adopted by individual financial operators and, on the other, equal protection for customers.
The regulatory decisions that are to be made may have as yet unpredictable effects on the development of market shares and the range of offering of new operators, on the degree of competitiveness of the financial industry and on its evolution in the different countries.
However, considering that the digitalisation of financial activities is an incontrovertible process and a structural feature of the new financial industry, the final part of the paper highlights the strategic choices that financial intermediaries (namely banks) are making in this changed market scenario.


Cristiana Schena - University of Insubria (
Alessandra Tanda -  University of Genoa (
Carlo Arlotta - University of Insubria and Consilia B.M (
Gianluca Potenza - Consilia B.M. (

The authors would like to thank Giuseppe D'Agostino, Rossella Locatelli and Pasquale Munafò for their useful comments on previous versions of this paper. We also thank FinTech companies and bank representatives for the interviews conducted with CONSOB in the first half of 2017. Any error or inaccuracy is ascribable to the authors only. The opinions expressed in this issue of Quaderni FinTech (FinTech papers) are those of the authors alone and do not involve in any way the liability of CONSOB. Therefore, in citing this work, it is incorrect to attribute the opinions expressed to CONSOB or its Top Management.

JEL Classification: G29 Financial Institutions and Services – other; G28 Government Policy and Regulation.

Keywords: FinTech, digitalisation, innovation, financial industry, incumbents, business model, marketplace, financial services, lending, crowdfunding, payment services, risks, fairness and transparency towards customers, financial stability.

ISBN 9788894369700