Evolution of Fintech

Evolution of Fintech
Name of the Student
Name of the University
Author Note
ABSTRACT
The research paper intends to make investigation on the evolution of fintech. The
basic purpose is to determine how the fintech is evolving in the financial world along
with the change in the technology and the new payment processes. In order to move
forward in the research paper the background study have been done and thereafter
several literatures are reviewed. There is discussion about the concept of fintech, the
traditional and the modern financial services and the relation of the fintech with the
payment solutions. The research paper minutely studies the details about how
technology is evolving and thereafter a relationship has been built between the
evolution of the fintech and technology as well as the payment systems. Secondary
research has been done and the data is analyzed using MS Excel statistical tools. The
findings have been discussed. The research concludes by stating that there is a
positive outcome of this analysis and there are several scopes to work further on it in
the coming future.
1 INTRODUCTION
There have been many changes in the recent period in
relation to the field of technology. Several new inventions and
innovations have taken place. These inventions and
innovations in the field of technology have helped in the
advancements of various services being provided by the
business organizations. These improvements have changed the
way the people are performing their daily activities related to
the communication, learning and development, travelling,
purchase and sales transactions, socializing and many
more(Linton and Solomon 2017). People are demanding for
quick and prompt services in this competitive and busy
market. Easy one-click solutions from anywhere are available
to the customers (Wall et al. 2016). The usage of the smart
phones, tablets and the laptops have made it easier for the
people around the world to make several transactions at any
time from anywhere. These easy solutions are attracting
consumers and thereafter all the financial institutions are being
motivated to adopt these technology advancements in order to
survive the competition and increase the profitability. The
research deals with one such important case of the impact of
the financial technologies on the payment technology.
1.1 BACKGROUND OF THE STUDY
The term Fintech is a shorter version of the term financial
technology. This is a new technology that competes with the
traditional technology and provides the society with several
advantages. It is the process of automation and innovation of
the financial services and thereafter providing those services
in a technologically efficient manner. Financial technologies
are evolving along with the technological innovations and
improvements. There has been a drastic evolution in the
financial procedures over the last 100 years. There have been
changes in relation to the payments solutions, banking
solutions, data storage, foreign trade transactions, and
investments as well (González-Páramo 2017). The financial
procedures have undergone such changes because of the
necessity to allow the global transactions. Fintech has helped
in the business development. Fintech was previously used in
the back office functions and was used in the leveraging of
personnel bank accounts, database management of the
consumers and execution of transaction (Scott, Van Reenen
and Zachariadis 2017). The current scenario implements
fintech for all financial issues. There has development in the
ATMs, online account checking system, online payment
systems and several investment systems as well. These
evolutions in the fintech sector are gaining customers very
quickly and smoothly.
1.2 RESEARCH AIM
The aim of the research is to understand how the fintech
company has evolved along with the innovation in the
technology and improvement in the payment process.
1.3 RESEARCH OBJECTIVE
The research objectives of the study are stated as below:
1. To understand the idea and concept of Fintech.
2. To critically understand the concept of traditional
financial services and the financial technology
services.
3. To understand and get an idea about the current
payment procedures and how fintech is associated
with the same.
4. To understand how fintech is evolving and how is it
affecting the consumers globally.
1.4 RESEARCH QUESTIONS
The research questions are stated as below:

1. What is the concept of fintech in the current market
scenario?
2. What are the differences between the traditional
financial management and the current financial
services being provided?
3. What is the current improvement in the payment
system? How is fintech associated with such
improvements?
4. How is fintech evolving along with technology and
what are the impacts on the consumers globally?
1.5 STRUCTURE OF THE STUDY
The research paper consists of six chapters and they are as
follows:
1. Introduction– This chapter gives a brief overview of
the technological improvements that are leading to
adopting of several financial technologies by the
financial institutions. The chapter also discusses
about the research background, aims and objectives
and the research questions.
2. Literature Review–This chapter consists of the
analysis of several concepts of the financial
technologies and analyses several scientific
literatures.
3. Research Methodology – In this chapter, the
researcher has done a descriptive research work in
order to assess how the fintech company has evolved
along with the evolution of technology and the
payment process.
4. Research Data – the primary data has been analyzed
in this section, the responses are recorded in MS
Excel, and the quantitative analysis has been done
thereafter.
5. Findings–The results of the analysis are explained in
the findings based on which recommendations are
provided.
6. Conclusion–The overall analysis is stated in brief
and the recommendations are given in this chapter.
2 LITERATURE REVIEW
2.1 CONCEPT OF FINTECH
The term “Fintech” has gained a huge importance in the
recent market because of the cheaper, faster and the user-
friendly services that is provided by it. The term has become a
hot topic for several financial institutions and private
companies. There has been more than 50 billion dollars of
investment made in this sector between the period of 2010 and
2015 by the private and the institutional investors (Scott, Van
Reenen and Zachariadis 2017). Fintech is an improvised
service that is actually a mixture of the financial solutions
along with technology. The sector of fintech is evolving
rapidly and there is a variety of definitions of this concept.
The general concept of the term is that fintech are those
companies that develop and thereafter provide financial
products and services by making use of information
technology. It increases the efficiency of the service sector by
using mobile centric IT technologies, software and other
modern technologies (Oshodin et al. 2017). The fintech
companies have responded very promptly to the changing
needs and preferences of the consumers. The fintech
companies are now involved in providing banking solutions,
investment solutions, payment solutions as well as trading
solutions. People consider a huge growth prospective of this
company in the upcoming future. The Global Financial Survey
conducted by PwC in the year 2017 shows that there has been
an increase in the percentage of the people believing in the
growth and evolution of the fintech companies in the coming
future (Demirguc-Kunt et al. 2018).
2.2 TRADITIONAL FINANCIAL MANAGEMENT VS.
FINTECH SERVICES
There has been a lot of changes in the financial
management procedures in today’s market because of the
innovation and evolution of the technology. The technological
advancement has changed how all the business organizations
perceives their risk and performs their tasks and how the
consumers are responding to such changes.
The traditional financial services involve a lot of
documentation process, lot of pen and paper work and a lot of
mental efforts to be provided (Coleman 2016). There is a
necessity to fill forms and other slips and then waiting in the
queue of the bank for depositing and withdrawing money from
the bank under the traditional financial system. The traditional
banks do not have enough digital footprints and hence the
services offered by the traditional banking sectors are very
slow and time consuming. Even the transfer under the
traditional system takes a lot of time as it uses the concept of
cheques, manager’s cheque, demand draft, money order agent
and money transfer agents. In order to transfer money in the
traditional system, all the necessary details of the account
holders as well as the beneficiary are to be recorded and
thereafter verifications of both the parties will be done. The
money is transferred only when the verification is done. The
task of the transfer of money thus takes a huge amount of time
and is very cumbersome in nature (Su 2016). In order to do
trade the merchants and the consumers requires being
physically present. The traditional process of financial
services involves a huge amount of cost as one single
operation involves a lot of people and hence the cost increases.
The traditional financial services are not available throughout
the day.
The fintech services are much advanced and offer a range of
advantages to the consumers. These services are available
throughout the day. The fintech services reduce the
operational cost of any business organization as it removes the
unnecessary intermediaries (Ng and Kwok 2017). It does not
require maintaining huge number of data in pen and paper
formats the fintech company uses the cloud services that help
the organizations using these services to store a large number
of data. The data can be accessed at any time form any place
and there is the least risk of the loss of the data under this
system. The fintech services have offered easy banking
solutions that allow the consumers to access their accounts
form any place and check their balances as well as make

transactions just by a click. The online payment system that
has been introduced helps in the transfer of the money from
one account to the other account on a real time basis and the
receiver does not need to wait for a long period of time in
order to receive the money. The transaction histories are
updated through SMS and emails and the consumers need not
go to the banks and the other financial institutions in order to
check the account balance all the time (Navaretti et al. 2018).
2.3 FINTECH AND PAYMENT SERVICES
Payment services usually involve transfer of funds, inward
and outward remittances, financial payments and payments for
online retail trading as well as investment trading. The
traditional payment services involved the visiting of the
financial institutions and filling up of several details and
thereafter making the payments (Ogbanufe and Kim 2018).
The transfer of the money then takes a lot of time to get
transferred to the beneficiary. The traditional process is also
very cumbersome and in certain cases, transparency is also
very low which creates a chance of credit default. The
companies have to incur huge amount of costs in order to
maintain the complicated processes as well as to maintain and
protect a large number of data. The companies therefore
always strive for a cost efficient process. Similarly, the
consumers also want smooth and flexible services at the least
time possible. The evolution of the technology therefore
attracted both the consumers and the financial institutions to
combine the financial services with the technological
innovations (Wang, Hahn and Sutrave 2016). The fact is that
the industries do not need mere production of new products
and services rather there is a requirement of new paradigm.
The combination of the technology with the finance has led
to the creation of the online payment system or the block chain
based payment system (Lai 2018). The new fintech start-ups
are providing with secured mobile wallets and payment
systems by developing secured software, which is the mixture
of integration, availability, confidentiality and authorization.
The unbanked people can also store a large amount of money
hassle free because of the availability of the smart phones and
high-speed internet. Many mobile applications are there that
does not require having a bank account as well. The fintech
company implements the concept of crypto currency and
block chain payment processor to improve the transactions in
the industry. People can now lend, borrow, pay and spend
money as per their wish without even contacting the bank.
Applications like Venmo and Apple provides with secured
payment methods. Several lending apps are also there for
example Chill Money, Dubco, Prosper and Lending Club that
provides credit facilities to the consumers at a minimum rate.
The online remittance system has also gained a huge
popularity because of the timeliness, safety, efficiency,
transparency and reliability. The online remittance
applications offer attractive exchange rates and interest rates
than the traditional remittance institutions. The money is
transferred to the abroad countries in a much faster way than
that of the traditional process. Regular updates of the
transactions are provided to the parties involved in the
transaction through mails messages. The transfer charges are
also minimal or zero. Although there has been several benefits
provided by the fintech services yet there be certain risk
factors related to safety and security of the transactions that
are questionable in nature (de Kerviler, Demoulin and Zidda
2017).
2.4 LITERATURE GAP
The literature review states that the innovation in the
technological field and the evolution of the fintech company
has diverted the minds of the consumers from using the
traditional financial services and hence they prefer the fintech
services. The changes in the tastes and preferences of the
consumers have led to the downfall of the traditional financial
industries and the modern financial technology services are
evolving. The payment services have also been developed
with the advent of the fintech companies. The literature gap in
this scenario is how fintech in the financial world is actually
evolving with the new payment and technology processes? Is
the evolution having a positive impact in the minds of the
consumers?
3 RESEARCH AND METHODOLOGY
3.1 RESEARCH METHOD OUTLINE
The outline is the framework of the research processes and
the steps that will be helpful in arriving at the required
outcome. The objectivity of the methodology is discussed in
this section. The processes and the techniques that will be used
in order to interpret the required calculation have been
mentioned in this section. The researcher has chosen the
positivism philosophy. A deductive approach has been
selected for conducting the research. The research follows a
descriptive research design. The research outline also provides
details about the data collection procedure and the sample
sizes based on which the conclusion is achieved.
3.2 RESEARCH ONION
The research onion helps in the understanding of the
research methodology as well as the research framework
(Saunders et al. 2015). The research work is done on the basis
of the research onion. The outcome of the research can be
obtained by the help of this and it also helps the researcher in
making the proper use of the research philosophy and the
limited time period.
3.3 RESEARCH PHILOSOPHY
The research philosophy helps the researcher in the
recognition of the research objective by efficiently using the
paradigm. There are four types of research philosophies and
they are Pragmatism, Realism, Interpretivism and Positivism.
The researcher in this case tries to find out the evolution of the
fintech with respect to the payment process and technological
innovations and hence the research philosophy followed in
this research work is the philosophy of positivism. The reason
behind choosing this philosophy is that the data collected and
reviewed are scientific in nature and are proven (Ray 2017).
The data cannot be altered while its collection because the
data are not dependent on the research subject. The researcher
has put emphasis on the factors that leads to the evolution of