Abstract
The changes in national financial systems during the last two decades are reflected, inter alia, in the emergence of Fintech firms. The name is a portmanteau from the words finance and technology. These include online platforms for raising and lending funds, robots-consultants, crypto currency trading, securities trading, electronic payments, digital investment management. They do not have to comply with prudential regulations as banks. They have become competitors to banks in performing banking operations. In order for someone to do business with Fintech firms, it is enough to have a mobile phone. In their business, they are exposed to financial and operational risks. Financial risks can occur in the form of maturity mismatch risk and liquidity mismatch risk. Operational risks can be caused by human error and inadequate information systems. For ten years now, Fintech firms have been operating in European countries undergoing transition. The governments of these countries have also encouraged the proliferation of Fintech firms by establishment of innovation authorities. In recent years, the operations of Fintech firms have been more adequately regulated by supervisory institutions by enacting regulations that cover their operations. The European supervisory institutions have enacted measures that are related to business operations of Fintech firms, but despite these efforts, regional differences between EU member states are still present.
Highlights
Financial institutions are institutions that perform an important role in channeling funds from entities that have surplus funds to those that have a shortage of funds
The possibility of obtaining cheaper sources in the form of debt and share capital can enable the entry of new Fintech firms into the financial sector, which can later lead to operations according to underestimated risk and lead to serious business problems
Improving cooperation in the field of business supervision of Fintech firms can help the exchange of information between domestic and international supervisory institutions, especially when the institutions operate in several countries and in different sectors
Summary
Financial institutions are institutions that perform an important role in channeling funds from entities that have surplus funds to those that have a shortage of funds. Digital finance is finance provided through mobile phones, personal computers, the Internet and credit cards connected to an appropriate digital payment system. To use digital finance services, users must have an account in their bank and must have funds in their accounts to be able to make payments or to receive cash through digital platforms, including mobile phones, the Internet or personal computers. Until the emergence of Fintech firms, financial services were provided by banks and their agents, microfinance institutions. Services were provided mainly through cash transactions and direct contact These operations were performed with a prior assessment of the debtor's creditworthiness. The emergence of Fintech firms has changed the environment because with the development of funds for the implementation of digital finance from mobile phones to computers, the need for direct communication has been significantly reduced.
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