From Open Risk Manual


Fintech is portmanteau word, a blend of the words Financial and Technology. As a term it came to prominence (primarily since 2015[1]) as a collective description for a group of newly established (startup) companies that use new digital technologies to provide services traditionally provided by existing financial institutions and intermediaries.

The progressive digitization of financial services is an ongoing process ever since the commercialization and wider availability of digital computers. Hence fintech is best understood as the current wave of activities and efforts. The primary distinguishing characteristics versus earlier generations of financial technology are

  • Widespread mobile digital interfaces
  • Very low cost hardware for storage and computation of data
  • Expanded network bandwidth
  • Diverse and mature software stacks

Technologies Used

The main technological pillars on which fintech is built are digital computing hardware and software plus communication networks


On the hardware side fintech companies mostly use off-the-shelf (readily available) hardware. Most prominently:

  • Mobile Phones (Smartphones)
  • Cloud Based Servers
  • Wired and/or wireless networks


  • Some fintech applications may use high-end computational (HPC) equipment such as GPU clusters
  • Efforts linked to Identity Management may also employ specialized biometric hardware.


On the software side fintech companies use a very wide array of technologies (software stacks), most of which are used in other domains as well

  • Mobile Applications
  • Large Scale Databases
  • Network Protocols (Including high level API's)
  • Machine Learning Algorithms
  • Artificial Intelligence


  • Cryptocurrencies and Distributed Ledgers is an example of a software solution that is uniquely developed by and for the purposes of fintech

Services Provided

Risk Management

Risk Management interplays with Fintech in two important and distinct ways:

  • Giving rise to potentially new or differentiated risks. Most obvious is the prominence of IT Risk but other risk factors may emerge e.g., linked to behavioral or other unique aspects of the new business models.
  • As technology used to enhance Risk Management tools and processes (Sometimes denoted Regtech)

Issues and Challenges

  • The fintech sector is covering potentially a vast area of financial services across many countries hence the term is likely to eventually lose its usability
  • Most of the target services are heavily regulated
  • It is too early to assess whether Fintech business models are subject to more or less risk. The catalog of Fintech Risk Events aims to chronicle the most important publicized incidents

See Also


  1. Google Trends