Fintech as financial innovation – the possibilities and problems of implementation

Abstract

There is a growing competition between banks and fintech not only in advanced economies, but also in the emerging markets. However, it is yet to be observed in Latvia to the same extent. This paper aims to evaluate fintech’s level of development in Latvia compared to Europe. The paper identifies financial services using innovative technologies offered by fintech companies, analyses the advantages and disadvantages of these services in comparison with services offered by the traditional financial sector companies (banks, insurance companies, institutions involved in asset management and investment, etc.), and evaluates how prepared are consumers to use fintech services. This paper documents the results of the survey aiming to clarify how well-informed consumers in Latvia are about fintech services, their convenience, speed and safety, as well as the consumers' current satisfaction with banking services. The hypothesis of this paper is that Latvian society is not ready to use services provided by fintech, but prefers banking services instead. Survey results provide some evidence in favour of this hypothesis: they show that respondents are generally unaware about fintech services in Latvia and their associated innovations and new financial products. This paper makes several recommendations for managers of fintech enterprises, association of start-up enterprises and risk capital funds as well as state institutions.