FinTech, Lending and Payment Innovation: A Review

• DOI: http://doi.org/10.1111/ajfs.12294
• Date: 01 June 2020
• Published date: 01 June 2020
• Author: Jian Zhang,Sumit Agarwal

FinTech, Lending and Payment Innovation:

A Review

Sumit Agarwal*

Department of Finance, National University of Singapore, Singapore

Jian Zhang

School of Business, Hong Kong Baptist University, Hong Kong SAR, People’s Republic of China

Received 23 January 2020; Accepted 9 February 2020

Abstract

The global landscape has seen the advent of new technology in offering innovative financial

services and products and reshaping the financial sector, namely FinTech. In this review, we

discuss the literature on recent FinTech development and its interaction with both banks and

consumers. We synthesize the insights it provides into two domains: credit supply and pay-

ment and clearing services. The rise of FinTech has introduced digital transformation of the

“bricks-and-mortar” banking model and dramatically changed the way financial services are

delivered. We also present several future questions and directions that are worthy of investi-

gation for researchers and policy-makers.

Keywords FinTech; Banks; Lending; Payments; Household finance

JEL Classification: D14, G21, G23

1. Introduction

The 2008 global financial crisis has triggered the fusion of new technology in the

design and delivery of financial services. Game-changing technological innovations

have been introduced into FinTech, short for Financial Technology, transforming the

way the financial industry operates and fulfilling customers’ needs with the help of

automation. New products and infrastructure upgrades are tested and introduced at a

much faster pace than in other “Industrial Revolutions”. FinTech disruption also

imposes big threats and more pressure on traditional banks. Examples of activities in

FinTech range from digital payment instruments, FinTech lending (i.e., peer-to-p eer

lending [P2P lending] and crowdfunding), open banking, cryptocurrency, to robo-ad-

vising. The adoption of FinTech services has also moved at a steady and upward pace.

According to the EY Global FinTech Adoption Index the rate has increased from 16%

*Corresponding author: Department of Finance, National University of Singapore, 15 Kent

Ridge Drive, Singapore 119245. Tel: +65-6516-8119, email: ushakri@yahoo.com.

Asia-Pacific Journal of Financial Studies (2020) 49, 353–367 doi:10.1111/ajfs.12294

©2020 Korean Securities Association 353