Introduction that since 2008 after the financial


Financial technology is a combination of innovative
business models with new or existing technologies to enable, expand and disrupt
financial services (Gumhuseinwala, Bull, & Lewis, 2015).

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According to Nicoletti (2017), at the begining of 21 century, financial processes have
switched to mostly digital mode.  Financial
institutions investes a lot in ICT infrastructure, but the highly progressive
evolution of computing power has gradually introduced new and fancy financial
technologies, business models  that are
creating an industry that has a clear indications of being disruptive in  the way people and businesses  access and apply their financial services (p. 16).

Arner (2016) notes that since
2008 after the financial crisis, the perception of  banks stability  is declining and the trust of technology firms
handling financing is on the rise globally. “In 2009, satoshi Nakamoto
(Pseudonym) introduced a new type of money called Bitcoin”. A bitcoin is
defined as a form digital currency that can be used to pay for transactions
without the use of banks or even other intermediaries. This is just one example
of such innovations that may be able to influence the transformations of
banking in future (Treleaven, 2015).

The rate of fintech
innovation is very high and the response of 
traditional banks according to 
financial experts is a negative one. With the ever changing lifestyle of
consumers, what seems to be most likely is that fintechs are going to continue
to grow in the future. Customers enjoy and are learning  more 
digital perspectives, this is made easy by already available devices and
applications that are easy to use. The fintechs also have the ability to handle
the issue of big data interms of storing much more information, accessing and
processing it fast (Gumhuseinwala, Bull, & Lewis, 2015) .

Financial technologies
are not just disrupting financial institutions but also other businesses. Small
business owners are facing a big challenge trying to compete with online shops.
The increase of Online shopping from online retailers like Amazon, e-bay or
even alibaba is greatly enabled by easy and quick payment technologies (Yasav,
2015, p. 6).


technologies in fintech.

The disruptive ways in
which fintechs has manifested themselves are seen in three ways within the
financial industry, this include:

Payments, there
is a big competition of new payment technologies like google wallet, PayPal  that have brought a big competition to
existing traditional methods like visa and master cards and equivalent money
transfer methods like western union facing competition to much cheaper methods
like world remit (Micu & Micu, 2016) .

Banking, the
new crypto currencies like bit coins, lite coins and others whose transactions
can be recorded in a block chain, are replacing the basic needs of a
traditional bank (Micu & Micu, 2016).

Funding, there
a number of online platforms such as, Kick starter dedicated to fund start-ups
through crowd funding, this systems raise funds by allowing investors to fund
them directly, and the traditional methods of getting microloans from
established banks are bypassed (Micu & Micu, 2016).


reason we classify fintecs as disruptive is the ability to conquer the entry
barrier that had firmly been built by existing banking and insurance giants.
Due to complexity of regulatory environment, easy use of existing technology,
technologies that the customers already possess with little or no switching
cost, fast –paced working environment, freedom to experiment product without
financial implications, killer applications software that are easy to install
and use, have accelerated the speed in which the customer  adopt the fintecs (Micu & Micu, 2016).

 Most financial
technologies like mobile money have influenced the traditional banks to lower
the cost of financial transaction. Furthermore, introduction of much more fancy
technologies like crypto currencies will even lower the costs of transactions
to zero. The result is a dramatic negative effect on the traditional financial institutions,
which currently have high operating costs and could disintermediate so many
financial processes (Backer, 2016).


influence of fintechs on consumers, businesses, and regulators (values).

Financial technologies have answered
mostly the question of financial inclusion  (Backes, 2014).

cost barrier

 Banking institutions design bank products that
are affordable to the wealthy. Such example are: the account opening fee, maintenance
balance, bank transaction and transfer charges that even take days to complete.
These charges have been very high for the middle income earners as well as the
poor to afford (Kauer, 2016, pp. 148-149).

Information barrier

to Madhur, Amarasinghe, & Calverey (2014)
mainstream banks have campaigned to the elite and rich customers, by
systematically selecting the demographics that suit the profile of  customers that would maximize their profits,
completely ignoring the poor and marginalized customers.




Proximity barrier

prefer banking system which are less strenuous, time consuming and quick
transactions. Proximity to financial service and quick financial transactions
have been impossible for main stream banks to provide (Bedi & King, 2015).

New live style of
technology (Consumer behavior)

life style of people need new banking technologies, the emergence of online
shopping, online money transfer, opened the gate for new need of more
sophisticated payment methods, that most main stream financial institutions did
not want to provide (Backes, 2014).

Cloud computing, the
Future of digital

computing is growing rapidly through business, as businesses and consumers
adopt current financial technologies, they are compelled to move from a private
network to a much broader one which are cost effective ones, cloud computing is
in the process of becoming the backbone of the way companies operate in the
digital economy as opposed for traditional packaged software. Cloud technology
offer scalable technology that reduces IT hardware costs (Fintech, 2017).

Handling data

Treleaven (2015) reports that  an increase in computing and processing power
has enabled big increase in the amounts of data that can be processed, stored
or analyzed with a given amount of time, such data include browsing industry,
financial information available etc. with big data business and financial
institutions can achieve a lot.  Nicoletti (2017) adds that payment technologies such
as paypal and market places such as lending club produce large amounts of data
that can be used to provide vry quick financial services. However data
management, that is, data quality, information security, sale of data, use of
data and intime updates are becoming a big challenge for regulators.

Financial technologies
and regulators

(Treleaven, 2015)  notes that positive reaction to the new
financial technologies is creating a new financial industry that also raises
the issue of regulation. The important question to answer is if effective
regulations and standards can be put in place to regulate the new and quickly
growing autonomous banking technologies. Some countries like UK, believe that
application of “automated reporting and advanced analytics” would be a key
method to regulate and protect the consumer from harmful fintech products (pp. 5-8).

Extrapolated Examples

of such disruptive technology include mobile money technologies that have had a
very high  adoption rate, and disrupted
the norm of banking in Africa, some parts of Asia, Middle East and Eastern
Europe.  Mobile money provide financial
inclusion by providing money transfer services, local payments and
international remittances by easily using a mobile device (Gumhuseinwala, Bull, & Lewis, 2015).

to Kauer (2016), the technology was
conceived in 2007 and since then, every year it expands its capabilities and
with breath taking ideas that have made payments, money transfer, paperless
banking platform and even loan services cheap, easy and without little or no switching
cost and without the need of an internet. People can pay for bills, transfer
money from one place to another that would otherwise would not be reached, pay
purchases, and receive money from another person without the need of going to
the bank.

Future of fintechs




Mainstream financial
institutions against fintechs.

traditional banks must find strategies to survive. The kind of strategies they
choose is depended upon: the level of digital integration, money and level of
skills needed to develop the choice of strategy (Mills & Mccarthy, 2017).

are several strategies that banks can adopt to compete with the disruptors…


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