Modules 2 & 3: Innovation and Fintech development

FinTech

The use of technology to provide new and improved financial services to consumers.

FinTech Definition (Umbrella Term)

An umbrella term for technologies powering innovation in financial services.

Digital Financial Services

The digital delivery of financial products and services through the internet, mobile phones, or other electronic devices.

FinTech Portmanteau

A combination of the words finance and technology describing firms using tech to change how financial services are offered.

Technology-Enabled Financial Innovation

Innovation that results in new business models, processes, or products with a material impact on financial services.

Customer Pain Points

Problems or frustrations customers experience that they are willing to pay to have solved.

FinTech Value Creation

Providing financial services that are cheaper, faster, easier, and more convenient than traditional providers.

FinTech Growth Period

The rapid expansion of fintech investment and deal activity from approximately 2008 to 2022.

FinTech Investment Peak

The point in 2022 when global fintech investment reached approximately 230 billion dollars.

Post-2022 FinTech Slowdown

The decline in fintech investment due to concerns about profitability and sustainability.

FinTech Venture Capital Concentration

The fact that the United States attracts approximately 43 percent of global fintech venture capital.

FinTech Unicorn

A privately held startup with a valuation exceeding 1 billion dollars.

FinTech Lines of Business

The major categories of financial services in which fintech companies operate.

Crypto

Electronic money and tokens built on blockchain technology.

Decentralized Finance (DeFi)

An internet-based financial system built on blockchain using smart contracts and decentralized applications.

Online Lending

Digital platforms that allow borrowers to access loans directly.

Crowdfunding

Digital platforms that raise equity, donations, or rewards from a large number of contributors.

Digital Banking

Fintechs providing day-to-day banking and personal finance management digitally.

Digital Wealth Management

The use of technology to automate investing, portfolio management, and financial analytics.

Payments (Paytech)

Digital payment systems for money transfers, remittances, processing, and analytics.

Insurtech

The digital distribution and management of insurance using data and technology.

FinTech Product Expansion

The strategy of starting with a single product and later diversifying into multiple financial services.

Entrepreneurial FinTech Startup

A small early-stage fintech with low revenues, few employees, and founder ownership.

Mature FinTech Company

A large fintech with high revenues, many employees, and often a public stock listing.

Digital-Only Bank

A bank that operates entirely online without physical branches.

Global Technology Platform

BigTech or TechFin firms that bundle financial and non-financial services.

FinTech Ecosystem

The network of stakeholders that support fintech innovation and growth.

Innovation Labs

Units within firms that conduct research and beta testing of new products.

Incubators and Accelerators

Organizations such as Y Combinator that support early-stage fintech development.

Technology Hubs

Innovation centers such as the MaRS Discovery District that support fintech ecosystems.

Capital Providers

Investors including angels, venture capitalists, and private equity firms.

Regulators and Policymakers

Authorities that oversee fintech activity and ensure financial stability.

FinTech Explained Lens

A framework of strategic questions used to evaluate what makes a fintech successful.

FinTech Customer

The group of users who pay for and use a fintech’s products or services.

Target Customer Segment

A specific group of customers a fintech chooses to serve.

Product-Market Fit

The alignment between a product and the needs of its target customers.

Customer Pain Point Definition

A negative experience or problem that customers are willing to pay to have fixed.

Value Proposition

A clear explanation of why a fintech’s solution is valuable and worth paying for.

Monetization Strategy

How a fintech captures value and generates revenue from its customers.

Business Model

The structure that explains how a fintech earns money.

Crowdfunding Monetization

Earning revenue through platform fees or commissions.

Balance-Sheet Lending Model

A fintech model where profits come from taking lending risk.

Software-as-a-Service (SaaS)

A monetization model where fintechs license software through subscriptions.

Order Flow Monetization

A model where platforms earn revenue by selling transaction data.

Evolution of FinTech

The historical development of financial technology across multiple phases.

FinTech 1.0

The infrastructure phase of fintech from 1866 to 1967.

FinTech 2.0

The digitization of traditional financial services from 1967 to 2008.

FinTech 3.0

The post-2008 phase marked by democratization of digital financial services.

FinTech 3.5

The rise of fintech in emerging markets driven by mobile technology.

Financial Inclusion

The effort to expand access to financial services for unbanked populations.

Social Finance

Fintechs that pursue both economic returns and positive social impact.

Disruptive Innovation

When new entrants gain market share by offering simpler or cheaper alternatives.

Sustaining Innovation

Incremental improvements that serve existing customers of incumbents.

Theory of Disruptive Innovation

A framework explaining how new business models challenge incumbents over time.

Low-End Disruption

Targeting overserved customers with good-enough products at lower prices.

Incumbent Response Strategy

The recommendation that incumbents monitor disruption and respond strategically.

Digital Innovation Strategy

A coordinated plan aligning technology innovation with business strategy.

Routine Innovation

Innovation using existing technology and business models.

Radical Innovation

Innovation using new technology within an existing business model.

Disruptive Innovation Type

Innovation using existing technology with a new business model.

Architectural Innovation

Innovation involving both new technology and a new business model.

Fourth Industrial Revolution

The fusion of digital, physical, and biological technologies.

Industry 4.0

A term describing the speed and scope of technological transformation.

Disruptive Technologies

Technologies that blur boundaries between digital and physical life.