Fintech, the concept that originates from the combination of finance and technology is a relatively recent phenomenon of business startups seeking to transform the financial industry. According to the World Economic Forum, it includes all online or mobile solutions for payments, insurance, transfers, investments, accounting instruments and credit, among other services.

Investment in financial technology companies grew 201% during 2014 according to a study conducted by Accenture. Another report from the same consulting firm together with Partnership Fund for New York City indicates that global private investment in this segment tripled between 2008 and 2013, growing from US$928 million to almost US$3 billion and it is expected to reach US$8 billion by 2018. 

The explosive growth of these ventures is explained, in part, by the comparative advantages with respect to the traditional financial system: low costs, fewer commission rates and access from anywhere around the world; Internet connection is the only thing required.  Millennials are the largest users of mobile technology and according to Accenture, young people are twice more likely than their elders to switch to a bank without physical branches or resort to technology companies offering banking services. 

On the other hand, the financial industry recognized the need to incorporate innovation in its business processes and products and in its strategies to capture and retain customers. Many investors are also interested in Fintech. Creativity and idea accelerators also contribute to the expansion of many small firms that are changing the form of financial services through the use of technology. 

This phenomenon is not exclusive to the United States, Europe or Asia, although Europe is the market where these investments are growing more. Countries that are at the head include the United Kingdom, the United States and Canada; Latin America and the Caribbean are also fertile ground for this type of startups.  

Examples of Fintech companies:

• Kantox: With headquarters in London and Spain, it offers a foreign currency exchange service between businesses (peer to peer), in other words without banking intermediation, through its online platform. It received a big boost of financing through various rounds of investment, raising 6.4 million Euros. 
• Cashually: Through this mobile app, people can pay or get paid from friends in an easier, free and faster way by sending a text message. 
• Paytouch: A payment method that introduces biometrics as a security measure, with fingerprint detection that controls the pulse and does not read photos of the fingers.  
• Increasecard: (in Spanish) Develops products and services that allow business owners to control, understand and manage credit card collections. Credit card issuers have different dates for placing coupons to the credit and this tool allows them to automatically manage each transaction. 
• Ibillionaire: It is a platform that allows you to track the investment portfolios of the most renowned references in the world, such as Warren Buffett or George Soros.
• Afluenta: (in Spanish) It is a collaborative finance site, in other words, of consumer lending among individuals. It originated in Argentina and has expanded to Peru, Chile, Mexico, Colombia and Brazil. 

Future challenges

Although Fintech companies are already attracting the attention of investors, they still have two big difficulties to tackle. The first is in connection with each country’s regulations and legal framework, which many times do not support the implementation of new ways to do things. The second is the resistance among institutions to innovate due to the belief that fraud prevention may be violated.