Fintech Start-up Research Articles

Paymob: transforming digital payments in Egypt and the region for a cashless society

Learning outcomes After completion of the case study, the students will be able to analyze the FinTech industry in emerging markets, distinguish the growth strategies for startups in the hyper-growth phase, using the Ansoff matrix, evaluate and select geographical markets for expansion (foreign country selection) and understand the liability of foreignness concept. Case overview/synopsis In 2015, Islam Shawky, Alain Al-Hajj and Mostafa Menessy founded Paymob in Egypt, a FinTech start-up providing technological and financial solutions to consumers and merchants in the country. The company had grown into one of Egypt’s most prominent digital payment providers by deploying infrastructure and technologies that empower the underserved with access to financial services. In 2021, Paymob had gained a lot of support from venture capital investors that ended with closing the largest in Egypt Series A fund of $18.5m led by Dubai-based venture capital firm Global Ventures. Although Paymob had already reached great success in Egypt, the founders’ vision was to become the regional leader of digital payments, focusing on small and medium-sized enterprises. So, they are considering regional markets similar to Egypt’s, such as the Kingdom of Saudi Arabia, a call with a lot of structure but a lot of competition, and Pakistan, a market with much less competition but relatively unstructured. The founders found themselves in early 2022 deciding between these two markets in preparation for the next round of Series B $50m funding. Complexity academic level This case study can be useful for courses in executive education. Supplementary materials Teaching notes are available for educators only. Subject code CSS 3: Entrepreneurship.

تحديد عائد الاستثمارات الأمنية للشركات التقنية الناشئة

تعتبر الشركات الناشئة في مجال التكنولوجيا بالغة الأهمية في النهوض بالمبادرات الرقمية في العديد من البلدان التي تخضع لأجندة الدولة الذكية. وبالتالي ، فإن الشركات الناشئة في مجال التكنولوجيا هي بائعون وموردون للخدمات للمنظمات الكبيرة مثل القطاع الحكومي والشركات متعددة الجنسيات والمؤسسات المالية. على هذا النحو ، أصبحت الشركات الناشئة سريعًا نواقل هجوم للجناة الخبثاء للدخول عبر الأبواب الخلفية إلى المؤسسات الكبيرة. ومع ذلك ، لا تزال الشركات الناشئة حكيمة في إنفاقها على الأمن السيبراني لأن نجمها الشمالي هو توليد الإيرادات من خلال تقديم خدماتها والحد الأدنى من المنتجات القابلة للتطبيق (MVP) لعملائها. تقترح هذه الدراسة عائدًا معززًا على الاستثمار الأمني (ROSI) والذي يساعد الشركات الناشئة في مجال التكنولوجيا على حساب العائد على الاستثمار الأمني وتبرير ميزانيتها للإنفاق على الأمن السيبراني على الرغم من وجود نماذج حالية لحساب عائد الاستثمارات المخصصة لنفقات الأمن السيبراني ، إلا أنها معقدة نوعًا ما ولا تعطي وضوحًا للإدارة من حيث القيمة النقدية للإنفاق على الأمن السيبراني. علاوة على ذلك ، لا تلبي النماذج الحالية ديناميكيات وفروق الشركات الناشئة في مجال التكنولوجيا. يوفر النموذج المحسّن أيضًا للشركات الناشئة في مجال التكنولوجيا القدرة على تعديل استثماراتها في مجال الأمن السيبراني بشكل مناسب بناءً على حسابات قيم الحد الأدنى (الأدنى) والحد الأقصى (الأقصى) لمؤشر ROSI. تم التحقق من صحة نموذج ROSI المقترح والمحسّن من قبل 5 من خبراء الأمن السيبراني الذين اتفقوا على أهمية وضرورة النموذج الذي سيتم تطبيقه على الشركات الناشئة في مجال التكنولوجيا. تتيح نتائج دراسة الحالة الخاصة بشركة FinTech الناشئة حساب Min و Max ROSI لتبرير العائد على الاستثمارات الأمنية وتزويد الشركة الناشئة بالقدرة على ضبط الإنفاق على الأمن السيبراني وفقًا لذلك.

Banking FinTech and stock market volatility? The BIZUM case

This paper investigates whether and how the adoption of FinTech by incumbent banks affects their stock price volatility. BIZUM, a Spanish FinTech real-time digital payment solution was adopted by incumbent banks in 2016 and therefore provides new evidence of real-world ex-post implementation. The results indicate that the adoption of BIZUM by incumbent banks had a significant effect, reducing their stock price volatility after it was launched. This finding suggests that investors were informed of and acknowledged the advantages of BIZUM, thus, use their adoption of FinTech Start-up strategy to offset adverse market circumstances. This paper provides insights for investors and international institutions regarding the role of the pricing of banking related assets, implications for incumbent banks whose portfolios are exposed to investments in disruptive technology and for banking regulators and authorities vis-à-vis risk related considerations of the adoption by banks of FinTech strategies.

Australia’s FinTech leaders: Education, work experience, and eagerness of self-employment

In recent years, many FinTech start-up firms have poured into the FinTech landscape. Since FinTech leaders (including founders and chief executive officers (CEOs)) have a major impact on the performance of their respective firms, research studies on FinTech leaders are indispensable. This paper discusses our study to investigate three major dimensions (education, work experience, and eagerness of self-employment) of FinTech leaders in an Australian context. We also compare these dimensions between FinTech founders and CEOs. Overall, we found that: (a) The majority of FinTech leaders are degree holders and one-third of them have a master’s degree. (b) Only about one-third of leaders with a master’s degree hold an MBA. (c) Only 19.4% and 11.1% of degree-holding leaders were graduated from the IT and finance discipline, respectively. (d) Only 19.0% of leaders have previous IT work experience and the mean years of such experience is only 2.0. (e) 54.8% of leaders have previous finance work experience and the mean years of such experience is 6.7. (f) When compared with CEOs, founders are more likely to hold a master’s degree and are more eager to be self-employed.

The role of bank and startup fintech P2P lending in supporting financial credit for Indonesian farmers

One of the challenges faced by farmers is securing capital for the development of their agricultural businesses. Banks and peer-to-peer (P2P) lending fintech startups employ various business models to assist farmers in obtaining the necessary capital. This study investigates the credit financing schemes available to farmers through banks and P2P lending fintech startups. The research, which utilized a qualitative approach, involved collecting both primary and secondary data. Primary data were gathered through comprehensive interviews with two academic experts in the agricultural business sector and five leaders of agri-tech startup companies. Secondary data included: (1) annual financial reports from BRI, Mandiri, and BNI; (2) statistical reports on P2P lending providers from the Financial Services Authority (OJK); and (3) models of financing schemes for farmers derived from a range of empirical sources. A descriptive analysis was subsequently conducted to explore the various financing schemes available to farmers through banks and P2P lending fintech startups, as well as to assess the performance of these financing programs via data on the rate of non-performing loans (NPLs). The findings indicate that the financing schemes implemented by banks predominantly focus on economic factors to facilitate loan repayment. In contrast, P2P lending fintech startup schemes emphasize both economic and social aspects, including enhancing farmers' knowledge in implementing Good Agricultural Practices (GAP) and improving financial literacy, aiming to ensure smooth loan repayments. Furthermore, the study observed an increase in the value of Non-Performing Loans (NPL) among both banks and P2P lending fintech startups during the Covid-19 pandemic.

"Analyzing The Effectiveness of Digital Media Mix Strategies on Fintech Startup Marketing: Promoting UPI Payment Applications Among Urban Consumers in Bengaluru"

This study investigates the effectiveness of digital media mix strategies in promoting UPI payment applications among urban consumers in Bengaluru. A sample of 300 respondents was selected, focusing on individuals aged 18 and above who actively use UPI apps. The research adopted a quantitative descriptive design, using a structured questionnaire to collect demographic and behavioural data on digital media engagement. Content validity was established through expert review, and a pilot study confirmed the reliability of the tool with a Cronbach’s alpha value of 0.87. Statistical analysis included regression and correlation techniques to evaluate the impact of social media, mobile advertising, content marketing, and AI-driven strategies on customer acquisition, engagement, retention, and satisfaction. Results demonstrated that social media ads and AI-driven marketing strongly influenced user acquisition, while mobile advertising played a critical role in user adoption and retention. Content marketing, particularly educational content, significantly affects user trust and long-term engagement. The findings suggest that fintech startups should prioritize integrated digital marketing strategies, combining social media marketing, mobile ads, and AI-driven personalization to optimize their outreach and engagement. The study also highlights the importance of educational content in fostering user trust and long-term loyalty. In conclusion, the research provides actionable insights for fintech startups on how to enhance their marketing strategies to promote UPI apps effectively. It is recommended that these companies invest in personalized, mobile-first, and educational content-driven campaigns to maximize customer retention and satisfaction.

Promjena arhitekture financijskog sustava pod utjecajem tržišta fintech-a

In the past seven decades, especially since the Global Financial Crisis, the financial system’s architecture has changed significantly around the world. New financial market entrants, such as fintech start-up companies, offer financial products and services more efficiently than established financial institutions (especially banks and insurance companies), bypassing the regulatory requirements established intermediaries must comply with. Despite the heterogeneity in the fintech concept, we use this term to consider innovations in financial products and services based on emerging information and communication technologies (i.e., information technology and mobile connectivity) as solutions that are changing the financial structure worldwide. Although the share of new participants in the financial system is rather small compared to the incumbents, fintech innovations are continuously advancing (e.g., crowdfunding, marketplace lending, cryptocurrencies, copy trading, robo-advice, insurtech, etc.), and their share is growing fast. This paper provides an overview of the fintech market and its impact (actual and potential) on the financial system’s architecture based on a comprehensive review of the theoretical and empirical literature.

Analisis Penerapan Manajemen Risiko Kredit pada Perusahaan Start-Up Fintech PT A

Fintech PT A is one of the pioneers in Indonesia that serves business people with lenders on a digital platform. One of the problems faced by fintech PT A is the increase in non-performing loans. This research is a case study at a fintech startup to analyze the application of credit risk management and provide recommendations for improving credit risk management to improve company performance. The methodology used in this research is descriptive qualitative analysis by collecting data from interviews and documentation studies. Interviews were conducted with the Director of Credit and Collection and Director of Risk who have a crucial role in risk management in the company. The results of the study show that the application of risk management to PT A is in accordance with the four stages of the Indonesia’s Financial Services Authority regulation number 04/POJK.05/2021 namely credit risk identification, credit risk measurement, credit risk control, and credit risk monitoring. However, the application of credit risk management by PT A based on data analysis obtained through interviews and documentation studies shows that the results have not operate optimally. Because at the stages of monitoring credit risk and controlling credit risk there are still several aspects that have not been fulfilled based on the Indonesia’s Financial Services Authority regulation number 04/POJK.05/2021. So the recommendation that can be given is that the company can create a more structured and sustainable risk management system with all related divisions so that it can accommodate all aspects of risk up to the risk monitoring and control process.

Razorpay: Providing Payment Convenience to Disruptors

Razorpay is a four-year-old Indian B2B fintech startup in digital payments which is venturing into digital lending. It aims to simplify digital payment flows involved in acceptance, processing, and disbursement of payments through superior technology and automation. This case details how Razorpay creates value for businesses by offering service convenience in B2B space. Razorpay started as a payment solutions provider, primarily known for their payment gateway. Over time the market for digital payment in India has matured, with multiple providers offering similar products making it difficult for Razorpay to sustain its growth by using technological leadership and service differentiation. To maintain its growth trajectory, Razorpay has launched multiple new products in the digital payment space as well as announced a foray into creating a marketplace for digital lending through launch of Razorpay Capital. The case provides details of the growth of Razorpay and its move from its core strength of payment gateway

Increasing Return of Marketing Investment (ROMI) Case of an Indonesian Fintech Startup Company

During 2023 global economic recession, economic growth is forecasted to decrease from 6% in 2021 to 2,7% in 2023, causing higher inflation and decreasing consumers buying power. Therefore decreasing investors’ appetite for the private market. The Venture Capital (VC) investors are avoiding risky start-ups and opt a more secure investment, making start-ups are struggling to raise funds and expected to survive at least for the next few years. PT ABC is an Indonesian fintech start-up company, providing payment system that offers free interbank transfer service for more than 7 million users and hundreds of companies and SMEs to date. As a start-up company funded by Venture Capital investors, PT ABC is impacted directly by the decreasing of investor appetite to fund. The survival strategy of PT ABC is to shift the business goal from “market growth” to “revenue growth”, with the implementation of cost cutting and increasing revenue. The functions that get the most of cost cut is Marketing, as employee layoff is not an option in PT ABC. Currently, PT ABC’s CMO does not an existing method to justify the marketing spending and how it ties with annual revenue goal, therefore does not have any insight of which marketing channels are productive and unproductive to revenue gain, which is the basis to determine where the cost should be cut from. Marketing Mix Modelling (MMM) is a multilinear regression with time series analysis that uses spending of each marketing channel as independent variable and sales revenue as dependent variable, with the purpose to determine the Return on Investment (ROI) as a measure of profitability, added with the Economic Value Added of Marketing (EVAM) as a measure of the production of shareholder value. This research is supported with AARRR framework to understand in which stage of the customer journey flow that requires the most support from marketing and sales. The solutions from MMM analysis are in the form of marketing budget proposals to boost revenue, also the implementation of MMM dashboard. From the AARRR framework, obtained the insight that PT ABC’s users took a longer time to understand the product value, however, once the users are activated, they tend to be loyal user. Therefore, the stage between Acquisition to Activation requires the most attention and support from the marketing and sales team.

Criminal factions and ICT-Mediated financial inclusion in Brazilian favelas: the role of context

ABSTRACT The city of Rio de Janeiro has the highest proportion of people living in favelas in Brazil and their residents have very restricted access to financial services, often needing to commute to other neighborhoods to make simple transactions. Therefore, this research examines a fintech startup called Banco Maré, created to improve financial inclusion in the largest complex of favelas of Rio de Janeiro - Complexo da Maré. A model for ICT-mediated financial inclusion based on the Capability Approach was applied to evaluate this initiative in two favelas dominated by distinct criminal factions in the complex. The results suggest that the financial inclusion depends on the nature of criminal factions dominating same. The work, therefore, indicates that contexts where an institutional order that favors greater agency, empowerment and participation of residents prevail, can strongly affect ICT-based financial inclusion initiatives in favelas dominated by lawless organizations.

Finance Kaart: A fintech for the “credit invisibles” in India

In this case, we describe the journey of Finance Kaart, a fintech start-up with a vision to serve India’s financially excluded customer segments. We explore the strategic options available to the start-up and its founder’s rationale for developing an online marketplace business model focused on Micro, Small and Medium Enterprise customers in small towns of India. The case further explores how India’s fintech ecosystem enabled frugal innovation by start-ups such as Finance Kaart. In a supportive ecosystem, Finance Kaart followed a partnership-driven approach but needed to address investor concerns regarding its “over-dependence on the partners” that arguably limited its profit potential. We conclude by discussing how Finance Kaart planned to overcome the challenges to its growth strategy by transforming it into a Neo-bank.

Practical Applications of Questioning the Wisdom of Crowds to Design Portfolio Diversification Strategies

In <b><i>Questioning the Wisdom of Crowds to Design Portfolio Diversification Strategies</i></b>, from the Winter 2023 issue of <b><i>The Journal of Alternative Investments</i></b>, <b>Vadim Zlotnikov</b>, <b>Igor Halperin</b>, <b>Lisa Huang</b>, <b>Cathy Pena</b> (all of <b>Fidelity</b>), and <b>Mikhail Stukalo</b> (of <b>Gainy</b>, a fintech startup), develop a diversification strategy based on measures of crowdedness. They design a portfolio with the positive characteristics of uncrowded stocks that also harvests the skill of active managers. They create a measure of crowdedness using holdings data on active managers. Stocks can become crowded based on conviction, reflecting manager skill. But they also can become crowded due to a consensus view, which leads to problematic characteristics; crowded stocks can exhibit negatively skewed returns with high forward-looking volatility. The authors also construct a long–short portfolio based on two different measures of crowdedness. The portfolio is beta-neutral and can be used to improve the Sharpe ratio of a 60/40 portfolio by dampening volatility. Maintaining smart money investors’ insights, the equity component does not sacrifice returns, as other defensive strategies do.

Affective boundaries: The power effects of objects of emotion in collaborative encounters

Organization studies has (re)turned to affect, a development that has brought affective tensions—build-ups of energy, or vitalities—to the fore of research. Previous studies on affect in organizations underline the organizational and transformational effects of affective milieus or atmospheres. I contribute to this research with a micro perspective on how affect shapes intersubjective relationships. I do so through an ethnographically inspired study of SusPens, a fin-tech start-up that uses algorithmic tools to screen sustainable investments. In the course of my empirical engagement, I identified recurring tensions in the collaboration between tech professionals and business professionals. I unpack these tensions in three collaborative encounters, focusing on how the algorithm functioned as a common reference point as well as a barrier for the collaboration. To conceptualize the observed tensions, the article builds on Sara Ahmed’s concept of objects of emotion and introduces affective boundaries as a theoretical construct for understanding the power effects of affective circulation. The article details how affective boundaries are installed through the affective misalignments that arise as the algorithm circulates as an object of emotion among the team members. The article concludes that the installment of affective boundaries delineates who is included in and who is excluded from the collaboration, pointing to how power works affectively in intersubjective relations, empowering some and disqualifying others.

Social Media Marketing and Word of Mouth on Product Purchase Intentions at Bibit FinTech Startup with the Mediation of Brand Awareness

Aims: This study aims to find out whether marketing through social media and word of mouth can significantly influence brand awareness and purchase intention of mutual fund products at Bibit startup, because branding plays an important role in services since the stronger the brand, the higher the customer's trust in the invisible purchase.&#x0D; Design/Methodology: This study uses a survey research design method and a quantitative approach which used to ascertain causal relationships between variables, a causal research design is used in this study. The sampling method was carried out online through an online questionnaire which is distributed to respondents who are considered according to predetermined criteria. Bibit startup or PT. Bibit Tumbuh Bersama products were used in the research. Collection of respondents was place during October and November 2022. The source of data in this study is 200 respondents who are Instagram social media users and followers of Bibit’s Instagram account. The research was conducted to obtain significant conclusions using the data analysis model which was processed using the SEM AMOS 26 method.&#x0D; Results: Based on the results of the Sobel test used in this study to examine the relationship between variables mediated by brand awareness, it has shown a positive and significant value. One of the variables that influence consumers’ decision to make a purchase is awareness of the brand of a product.&#x0D; Conclusion: Concerns concerning the expansion of social media marketing must be monitored in order to strengthen a brand's visibility. Consumers who are aware of a brand's existence are more likely to make recurrent purchases as well as first-time purchases.

СТАНОВЛЕННЯ СЕКТОРУ FINTECH: МОЖЛИВОСТІ ТА РИЗИКИ В УМОВАХ ЦИФРОВОЇ ЕКОНОМІКИ

The article is devoted to the study of the state, trends and prospects of the development of the FinTech sector, the identification of opportunities and risks of its development in the conditions of the digital economy, and the determination of measures to accelerate such development. The main trends of FinTech development are analyzed. The advantages of using fintech providers have been determined, in particular: fast provision of financial services; a small number of regulatory requirements; the possibility of cooperation with banks; facilitating access to instant funds for urgent needs or loans for small amounts for people with low incomes; increasing financial convenience for users, since access to services is possible from any place where Internet access is available. The types of companies providing fintech services, the basic groups of digital technologies, on the basis of which fintech services are implemented, were studied. The possibilities of technology application are summarized: blockchain, big data, Internet of things, cloud computing, artificial intelligence, biometric technologies, augmented/virtual reality, embedded finance, SAAS, Open Banking by types of financial activities and services. Factors and risks of FinTechs development are studied: liquidity mismatch, speculative bubbles, interconnectedness, systemic importance, risk of regulatory problems, displacement of traditional jobs and creation of new forms of inequality. To accelerate the development of FinTech at the international and national levels, it is proposed to carry out groups of measures depending on their content: measures of a technological nature (acceleration of the development of technologies on which FinTech is based); measures to create a competitive environment and effective functioning of the fintech market; educational activities; regulatory measures at the state level; state measures to stimulate innovation; cyber security measures; implementation of international coordination. Keywords: Fintech, digital economy, digitalization, electronic payments, risks of fintech activities, cyber security, fintech provider, financial services, digital technologies, fintech startup.

Digital currency as a tool for reducing information asymmetry: Start-ups' financing example

Support for technology startups is a strategically important issue of economic development. One of the most relevant areas is a fintech startup. In this regard, it is interesting to consider the possibilities of new digital tools in the context of startup financing processes. The paper considers the problem of low efficiency of investing in startups, and makes an assumption about the possibilities of reducing the existing inefficiency of venture investments associated with information asymmetry through the usage of digital currency and digital platform.

СТАНОВЛЕННЯ СЕКТОРУ FINTECH: МОЖЛИВОСТІ ТА РИЗИКИ В УМОВАХ ЦИФРОВОЇ ЕКОНОМІКИ

The article is devoted to the study of the state, trends and prospects of the development of the FinTech sector, the identification of opportunities and risks of its development in the conditions of the digital economy, and the determination of measures to accelerate such development. The main trends of FinTech development are analyzed. The advantages of using fintech providers have been determined, in particular: fast provision of financial services; a small number of regulatory requirements; the possibility of cooperation with banks; facilitating access to instant funds for urgent needs or loans for small amounts for people with low incomes; increasing financial convenience for users, since access to services is possible from any place where Internet access is available. The types of companies providing fintech services, the basic groups of digital technologies, on the basis of which fintech services are implemented, were studied. The possibilities of technology application are summarized: blockchain, big data, Internet of things, cloud computing, artificial intelligence, biometric technologies, augmented/virtual reality, embedded finance, SAAS, Open Banking by types of financial activities and services. Factors and risks of FinTechs development are studied: liquidity mismatch, speculative bubbles, interconnectedness, systemic importance, risk of regulatory problems, displacement of traditional jobs and creation of new forms of inequality. To accelerate the development of FinTech at the international and national levels, it is proposed to carry out groups of measures depending on their content: measures of a technological nature (acceleration of the development of technologies on which FinTech is based); measures to create a competitive environment and effective functioning of the fintech market; educational activities; regulatory measures at the state level; state measures to stimulate innovation; cyber security measures; implementation of international coordination. Keywords: Fintech, digital economy, digitalization, electronic payments, risks of fintech activities, cyber security, fintech provider, financial services, digital technologies, fintech startup.

The Effect of Fintech Funding on Bank Profitability: A Case of ASEAN-5

Many reports on fintech prospects in ASEAN predict that fintech plays a critical role in the digital economy and significantly influences the banking industry, attracting many scholars. However, an investigation of the effect of fintech on bank performance across cross-countries has not yet been conducted. Besides, the reports showed that fintech funding had been dramatically rising in recent years, accelerating fintech startup development. Therefore, the authors are concerned about the “How is the effect of fintech funding on bank performance, especially regarding profitability?”. These are the motives for conducting the study. Using a sample of 57 banks and data on fintech funding from 2017 to 2021 in Malaysia, Philippines, Thailand, Indonesia, and Vietnam, the dynamic panel model is estimated by Panel Corrected Standard Error. The findings show that the growth of fintech funding negatively influences bank profitability, but its lag effect is positive. The results are mostly validated through multiple additional tests (in the context of Covid-19, sorted by country and bank size) and a robustness check by an alternative estimator (Generalized Least Square). Besides, the authors explored some interesting exceptions. In detail, fintech funding does not influence bank profitability in Malaysia and Indonesia, but it negatively links with ROA in Vietnam, and large banks are not sensitive to the growth of fintech funding. Keywords: fintech funding, bank profitability, ASEAN-5. https://doi.org/10.55463/issn.1674-2974.50.4.5

Інноваційні технології цифрової економіки як напрямок інвестування у розвиток України

The article examines the issue of innovative financial technologies in the context of the digital economy. The leading foreign experience of investing in fintech companies was analyzed, and the dynamic development of financial technologies was proven based on the analysis of statistical data. The main features of fintech companies are revealed. Quantitative and qualitative methods (the method of discounted cash flows, the first Chicago method and the Berkus method) of company value estimation, which are better than others, are able to take into account the peculiarities of the fintech industry, are considered. It has been proven that the optimal valuation method for mature fintech companies is the discounted cash flow method and the first Chicago method. A qualitative assessment of the Ukrainian fintech startup was also carried out using the Berkus method.