Digital Business 2 (2022) 100028

Contents lists available at ScienceDirect

Digital Business
journal homepage: www.elsevier.com/locate/digbus

Digital transformation and the emergence of the Fintech sector: Systematic

literature review
Marta Barroso a, Juan Laborda b, *
a
Management Solutions, Torre Picasso, Plaza Pablo Ruiz Picasso, 1, 28020 Madrid, Spain
b
Department of Business Administration, Universidad Carlos III, Getafe, 28903 Madrid, Spain

A R T I C L E I N F O A B S T R A C T

JEL classification: This paper provides an analysis on the emergence of new technologies in the financial industry and their
G20 application to financial and investment activities, where organizations are highly equipped with the technology
G21 needed to overshadow traditional financial institutions. In addition, three of the most important and contro­
G23
versial areas of this sector -challenges, regulation and collaboration- are reviewed and analyzed in depth through
G30
L26
a systematic literature review. VOS Viewer software has been used to classify the different keywords, according
O33 to their co-citation, following clustering techniques. Thanks to the studies carried out by other researchers, it has
Keywords:
been possible to structure clearly the distribution and trends in the financial sector, mentioning also possible
Fintech future trends and gaps to be researched in the sector.
Regulation
Banking
Digital transformation
Systematic literature review
VOS viewer

1. Introduction are entering the market (known as Fintech), taking advantage of this
digitization, in order to provide financial products and services. Fintech
This document provides a broad view of what changes the financial firms are start-up companies willing to disrupt the financial industry by
industry is undergoing and how it might look in the future. It is intended providing services and products involving digital platforms and using
to offer the current state and perspectives of the financial sector on the advanced technology (Wang, Xiuping, & Zhang, 2021). They emerged as
main issues it covers. The study is motivated by the high degree of an alternative to traditional banking in response to the gap left by banks
innovation and interest in the development of new products and services during the 2008 financial crisis; experiencing an annual growth of
in the digital field, and those related to the financial sector. These in­ 46.5% since its appearance (Fung, Lee, Yeh, & Yuen, 2020). These new
novations are quite recent, being the reason of the upsurge of so many players, among other effects, facilitate access to the digital financial
doubts and challenges for researchers, economists and regulators (Mil­ world, provide more specialized services focused on client needs, are
ian, Spinola, & de Carvalho, 2019). flexible and agile, and boost innovation and competition throughout the
Due to the speed of today’s technological advances, the Fourth In­ financial industry. The outcome, according to Weller and Zulfiqar
dustrial Revolution is currently disrupting nearly every industry in every (2013), is a higher economic and financial stability, although they also
country. The scope and extent of these changes involve the trans­ pose new challenges and solutions in this sector, which will eventually
formation of entire systems of production, management and governance be discussed.
(Xu, David, & Kim, 2018). Therefore, the Fourth Industrial Revolution Our main aim on this paper is to analyze the current situation of the
brings as a result a massive use of the Internet, social networks, digital financial sector, regarding all the agents that constitute the sector. The
devices, etc. The result, regarding the scope of this study, is a greater study proposes to structure and analyze the available academic litera­
diversity in the form of new business models in the provision of financial ture by carrying out an exhaustive academic research on the scope of
services. The outcome is the emergence of a new set of companies, which digital finance. It is intended to identify new directions and

* Corresponding author.
E-mail address: [email protected] (J. Laborda).

https://doi.org/10.1016/j.digbus.2022.100028
Received 2 November 2021; Received in revised form 14 May 2022; Accepted 14 May 2022
Available online 20 May 2022
2666-9544/© 2022 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-
nc-nd/4.0/).
M. Barroso and J. Laborda Digital Business 2 (2022) 100028

opportunities in the field, in order to clarify the main questions raised by different stages. During the first stage (1866–1967), globalization
academics: How regulated is the Fintech sector? What kind of challenges allowed financial interconnections, payments and other financial
do Fintechs and the digital financial sector face? What mechanisms do transactions to cross borders between countries. Furthermore, the stage
banks and Fintech have to survive in the long term? Will these platforms ended in 1967 with the invention of the first ATM, where the world saw
cooperate with traditional operators to share services? By trying to finance and technology combined for the first time. In the second stage
respond to the main questions, this paper aims to contribute to banking (1967–2008), the first credit cards also appeared and SWIFT messages
literature by forming an empirical basis for future studies. were created (system enabling interbank financial transactions), thus
The paper is structured as follows: Firstly, the work provides a the first sign of online banking appeared. Finally, in the third stage
literature review of the digitization process of the financial sector and its (2008-onwards) the process of digitization rapidly changes into a path
functionalities. It covers a brief introduction of the digital trans­ where firms start to use innovative technology in their processes. Being
formation at the sector, the appearance of Fintech firms, and their goals technology the main driver, new start-ups start to appear in the financial
and functions. It also focuses on describing the new business models that industry, known as Fintech, as an alternative to traditional banking in
are being undertaken, as well as the emergence of large technological response to the gap left by the banks during the 2008 financial crisis.
companies (Bigtech). Finally, information is given on the different
technologies used, such as machine learning or robo-advisors, which 2.2. What is Fintech?
could potentially reinforce the different business models (Fung et al.,
2020). Nowadays, the use of technology is essential, but, what exactly is
Next, the proposed methodological framework and the obtained re­ technology? Technology is a fundamental pillar for the economic, social
sults are detailed. The research design is conducted through a systematic and cultural development of the society. It is understood as the appli­
literature review, where the obtained results are presented after an cation of materials, tools and new processes to the different activities,
exhaustive and quantitative analysis of the literature available in which are daily done. A report conducted by the World Economic Forum
different databases, using clustering techniques via Vos Viewer. The (2015) stated that it is not possible to avoid innovation derived from
activities of Fintech companies raise several questions about the level technology.
playing field between these firms and banks, in terms of regulation, In order to understand change in the financial sector in a more
competition assessment and cooperation (Gai, Qiu, & Sun, 2018). As a comprehensive view, Hanelt, Bohnsack, Marz, and Antunes Marante
result, the performed analysis is based on three key issues concerning (2021) define digital transformation as an organizational and contin­
this sector: regulation, challenges and collaboration. It consists of uous change that can be triggered and shaped by the generalized
researched academic articles based on a predetermined list of keywords, diffusion of digital technology. This continuous change shows that
which are searched for in a shortlist of high-profile international con­ recent technological activity in the financial industry has led to the
ferences and journals. Afterwards, the core results of the analyzed entrance of new agents in the market, known as Fintech. The term comes
research are described systematically. In addition, the identified articles from the association of the words Finance and Technology. Researchers
are catalogued in different figures that allow obtaining a complete in the field have come up with different definitions for this term. Ac­
summary of the identified academic research in the area, thus we can cording to the Financial Stability Board (FSB), Fintech firms are
identify most research gaps, which provide a basis for discussion of described as “technologically enabled innovation in financial services
future research directions. Finally, the main conclusions are summed- that could result in new business models, applications, processes or
up, aimed at answering the key questions of this paper. products with an associated material effect on financial markets and
institutions and the provision of financial services” (FSB, 2017a, 2017b).
2. Literature review The Organization for Economic Co-operation and Development de­
scribes Fintech as “innovative applications of digital technology for
2.1. The digital financial sector and its transformation financial services” (OECD, 2018). On the other hand, it can be referred
to as “innovators and disruptors in the financial sector that make use of
Data on Fintech investment reveals its dramatically rapid increase the availability of ubiquitous communication, specifically via the
over the last years and, consequently, there has been a considerable Internet and automated information processing” (Gomber et al., 2017).
increase in academic literature on the subject, mainly from 2015 on­ The definition can still be nowadays ambiguous, but it can be stated that
wards (Zavolokina, Dolata, & Schwabe, 2016a, 2016b). According they are mostly start-ups assuming the paper of traditional financial
Accenture (2016), overall Fintech in Europe investment doubled (120%) institutions bringing new business models into the industry. They
between 2014 and 2015 and the number of deals increased by 51%. On appeared in the middle of the financial crisis, and they emerged as an
the other hand, in Asia-Pacific, investment more than quadrupled in alternative to traditional banking. It was then when Fintech firms
2015 to $4.3 billion, with most of those investments taking place in appeared and filled in the gap left by banks, leading to a massive in­
China ($1.97 billion) and India ($1.65 billion). Fintech investment in crease in global investments in Fintech ventures from USD 4.05 billion in
North America grew 44% to $14.8 billion in 2015, and the U.S. 2013–12.21 billion in 2014 (Skan, Dickerson, & Masood, 2015). Overall,
continued to dominate the sector with 667 Fintech deals, an increase of the introduction of Fintech firms has led to an increase in economic
16%. growth and apparently in financial stability. Moreover, established firms
Terms like ‘digital innovation’ or ‘digital transformation’ are used in in IT sectors are striving to enter this scenario, acting as active financial
numerous researches in order to try to identify innovations and dis­ service providers (OECD, 2018).
ruptions. Digital innovation is defined as “a product, process, or business Traditional banks have seen themselves in a position with
model that is perceived as new, requires some significant changes on the augmented pressure where Fintech firms apply innovative technology to
part of adopters, and is embodied in or enabled by IT” (Fichman, Dos offer commercial and corporate banking products and services raising
Santos, & Zheng, 2014). Additionally, according to Guellec and Paunov customer experience. These financial innovations can be classified as;
(2017) “digital transformation is the digitization of previously analog new products/ services, new production processes/ new organizational
machine and service operations, organizational tasks, and managerial forms (Frame & White, 2014). This paper will be more focused on the
processes”. The crossing point between IT and finance is known as first two.
Digital Finance, which describes the digitalization of the financial in­ Table 1 displays the main business functions in Digital Finance,
dustry (Gomber, Koch, & Siering, 2017). which are the ones that are affected by the potential of new technologies
However, the Digital Finance field has experienced a continuous and services. It includes the relevant literature, in order to understand
change, which Arner, Barberis, and Buckley (2015) explain in three better the digital transformation of the sector, following the scheme

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M. Barroso and J. Laborda Digital Business 2 (2022) 100028

Table 1
Fintech main business functions.
Business Description Academic articles
function

This rapidly growing function can be defined as “all payments that are initiated,
processed and received electronically” (Hartmann, 2006). Adopting digital
payments has numerous advantages for consumers, offering convenience and
speed. Unlike traditional transactions, new payment services discourage theft
and other cash-related crimes (Rahman, Ismail, & Bahri, 2020).
Munir (2004), Hartmann (2006), Dahlberg, Mallat, Ondrus, and Zmijewska
Digital payment solutions encompass various and innovative forms of payment
(2008), De Bel and Gâza (2011), Contini, Crowe, Merritt, Oliver, and Mott
where the Internet acts as an ‘intermediary’ between the bank and the customer:
(2011), Bradford and Keeton (2012), Zulhuda (2012), Shetty, Shetty, and
Payment services
Amale (2014), Gao and Waechter (2017), EY (2017), FSB (2017a, 2017b),
1. Mobile banking is the access to banking services via a mobile phone and it is
Gomber et al. (2017), World Economic Forum (2017), Subaramaniam et al.
an e-payment subcategory.
(2020), (Rahman et al., 2020)
2. Peer-to-peer (P2P) payments are as well attached to digital payments,
allowing payments between private individuals.
3. Another relevant and innovative concept is e-wallet, which “is a payable
device without the use of cash or money” (Subaramaniam, Kolandaisamy,
Jalil, & Kolandaisamy, 2020).
There is a surge of online platforms matching lenders and borrowers. Online
funding platforms are known as crowdlending or crowdfunding. The main idea
is raising funds through the provision of small credits by small investors in an Chircu and Kauffman (2000), Berger and Gleisner (2009), Belleflamme,
Credit and online platform. There are different classes of crowdfunding platforms; debt and Lambert and Schwienbacher (2014), Allison, Davis, Short, and Webb (2015),
lending equity crowdfunding, donation-based crowdfunding and reward crowdfunding. Burtch and Chan (2014), Morse (2015), FSB (2017a, 2017b), Gomber et al.
The emergence of financing via online platforms has decreased transaction (2017), Hudon, Labie, Szafarz, and Eds.). (2019)
costs, enabling the financing of small businesses, therefore increasing financial
inclusion.
‘Insurtech’ is used to refer to those firms operating in the insurance industry
using the latest technology. There are no further motivations for research, since
there are not many important disruptions. Instead, there are improved existing
Insurance insurance products and services. Another assertion is that Insurtech firms have Chuen and Deng (2017), Gomber et al. (2017), IAIS (2018), Chen (2018),
services entered the market by collaborating with incumbents rather than replacing S&P (2018), Baker and Dellaert (2017), Deloitte (2018), Stulz (2019)
them. Robo-advisory disruptions in the insurance sector are the emerging
innovators, being capable of lowering costs while increasing quality and
transparency.
Digital investment means making investment decisions in new assets, securities,
commodities, etc. or the management of a portfolio using technological devices.
This business function includes:

1. Mobile trading: way for investors to invest and manage portfolios via mobile
devices anywhere and anytime. Barber and Odean (2002), Bouwman, Carlsson, Molina-Castillo, and Walden
Investment 2. Social trading: it “allows making investment decisions based upon (2007), Lechner and Nolte (2007), Lee (2009), Lattemann et al. (2012), Tai
management information gathered in online communities” (Doering, Neumann, & Paul, and Ku (2013), Zhang and Teo (2014), Biais and Foucault (2014), Doering
2015). et al. (2015), Gomber et al. (2017)
3. Online brokerage: means giving the same services as traditional brokers but
via online. Therefore, they are independent from time and place.
4. High frequency trading (HFT): it falls under the B2B context. It is understood
as “investors using computers to trade securities over extremely short time
intervals”. (Biais and Foucault, 2014)

presented by Gomber et al. (2017).Table 2) Given their size, they rely on data analytics, which provides them
with a competitive advantage against the rest of their competitors of the
market. Being access to data the main fundamental asset of a company
2.3. Bigtech (Petersen, 2004), Bigtech have the competitive advantage of managing
the required information from their customers in order to provide
The literature on this topic suggests that this market segment is financial services. Having access to all this information acts as a higher
mainly recent. It is important to know these companies from a financial barrier to entry (Hauswald & Marquez, 2003), increasing interest rates
point of view, since their popularity is more addressed (related to) to the and firm’s profits.
IT sector. The term Bigtech comes from the association of the words Big On the other hand, Bigtech companies can act in the market as a
and Technology. They are a group of technological companies provi­ marketplace or as a reseller (Hagiu & Wright, 2015). The marketplace
sioning direct financial services (Frost, Gambacorta, Huang, Shin, & sells the products or services directly to the final customer whereas the
Zbinden, 2019). Others, like Zetzsche, Arner, Buckley, and Tang (2020), reseller acts as a middle intermediary, buying the products from sup­
refer to them as Techfin (union of Technology and Finance). According pliers and selling them to the customers. In the former case, Bigtech firm
to a McKinsey report, Bigtech firms could reduce the banking industry’s gives the option to engage with incumbent financial institutions through
RoE by around four percentage points to an “unsustainable 5.2%” by the their channel, benefiting from network effects (De la Mano & Padilla,
year 2025 (McKinsey., 2015). 2018). In the latter case, it acts as a reseller when it raises funds lending
The main difference between the two groups of firms is that tech­ them to the consumers. In addition, De la Mano & Padilla (2018) talk
nology, and not finance, has become the Bigtech’s main driver (Carstens, about the monopolization of the credit market, where banks would
2018), although they provide almost the same services as Fintech: simply fund Bigtech loans. If this were the case, it would harm consumer
payment services, insurance, credit, and investment/ wealth welfare directly affecting competition and financial stability.
management.

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Table 2
Digital finance technology.
Digital finance Description Academic articles
technology

Artificial intelligence can be described as a set of technologies that can simulate

human actions in technological devices that have been previously taught without any
new intervention (Buchanan, 2019).
A related technological concept is Machine learning (ML), which is a set of algorithms
that can predict new scenarios, with the approaches previously given. Chakraborty
and Joseph (2017) indicate the applications of ML in the banking system. For
example, understanding the evolution of mortgage contracts is crucial for the
performance of the financial institutions’ balance sheets. On the other hand,
Artificial Wuerges and Borba (2009), De Prado (2018), Chakraborty and
algorithms may be used in predicting purchase patterns of current customers in order
Intelligence Joseph (2017), Buchanan (2019), Helbing (2019))
to advise them more precisely.
Finally, Chakraborty and Joseph (2017) present different models used, as Artificial
Neural Networks or Genetic Algorithms, which are both algorithms inspired in the
functioning of the human brain. Helbing (2019) refer to these as the emergence of a
new label, called “Cognitive Computing”. It is also interesting to mention the research
conducted by De Prado (2018), where he states that most hedge funds conducting
machine learning techniques to financial datasets fail due in part to the belief that ML
can be used as a panacea.
A related field is Big data, which is “data whose size forces us to look beyond the tried-
and-true methods that are prevalent at that time” (Jacobs, 2009). In a simpler way, it
“describes the massive quantities of data generated and collected in commercial
transactions and other events” (Barr, Koziara, Flood, Hero, & Jagadish, 2018).
Big Data analytics refers to the application of analytical methods to large amounts of
data sets. These data sets are outlined regarding the “Four V’s Dimension” (Volume,
Jacobs (2009), Hurley and Adebayo (2016), Barr et al. (2018), Gepp
Big Data Variety, Velocity, Veracity). Banks or Fintechs rely on their customer’s past data or
et al. (2018)
even current determinants not directly related to creditworthiness (Hurley &
Adebayo, 2016), for determining their credit scores. Gepp, Linnenluecke, O’Neill, and
Smith (2018) give an analysis of the big data techniques used in different areas of
finance and auditing. They reveal that financial failure and financial fraud modeling,
stock market prediction and auditing, are the main domains of Big Data usage in
finance.
Blockchain is a digital system that enables recording transactions in a decentralized
distributed ledger. It is decentralized since any authority or institution do not regulate
it. It is considered a “trust machine” (Wang, Bellavitis, & DaSilva, 2018) since it relies
on the work of all the constituted networks of the platform and all the transactions are
recorded and available in the blockchain. Consequently, a hacker would have to
change all the blocks, making cyberattacks almost impossible.
The most important ramification of the blockchain is cryptocurrencies or digital
currencies presented in 2008 by Nakamoto (2008).
There are numerous literature reviews regarding different applications of blockchain Nakamoto (2008), Mills et al. (2016), Caytas (2016), Crosby et al.
Distributes Ledger
in the financial industry. For instance, Hellwig and Huchzermeier (2019) provide a (2016), Wang et al. (2018), Hellwig and Huchzermeier (2019),
Technology
discussion of the potential risks and opportunities regarding the use of this technology Vontobel (2019)
in the trade finance area. On the other hand, authors like Mills et al. (2016) or Caytas
(2016), provide similar approaches on how the payments, clearing and settlement
area could be disrupted by this technology.
Blockchain could reduce operational and transaction costs, and financial
inefficiencies. In addition, incumbent financial institutions are starting to implement
this technology into their operations. In addition, blockchain technology can be
applied in other areas of the financial industry, having some further applications as
well outside this sector (Crosby, Pattanayak, Verma, & Kalyanaraman, 2016).
Interestingly, smart contracts could be implemented in DLTs. Smart contracts are “a
set of promises that are agreed on between parties, encoded in software, and executed
automatically when agreed-upon criteria are met” (Hellwig & Huchzermeier, 2019).
These types of contracts could make even simpler operations and transactions in Arner et al. (2015), Hellwig and Huchzermeier (2019), Brammertz
Smart Contracts
blockchain. They allow more traceable, transparent and irreversible transactions from and Mendelowitz (2019)
both a legal and technological point of view. According to Brammertz and
Mendelowitz (2019), smart contracts could replace, under some standards, almost any
financial contract due to their mathematical nature.
Wireless connections have increased their popularity over the business sector. Cloud
computing has been subject of numerous researches and all of them have come to the
point where its definition is wide and complex. It can be studied from a technical point
of view or from a business one, but one thing is certain; it has revolutionized
traditional business models and value chains.
Every activity is held virtually, which makes it easier for organizations to enter a
global market without the necessity for a physical structure (Rossi, 2014). Therefore,
it can be defined as; “an information technology service model where computing Leimeister, Böhm, Riedl, and Krcmar (2010), Rossi (2014), Marston
Cloud Computing
services are delivered on-demand to customers over a network in a self-service et al. (2011), Nagashree et al. (2014)
fashion, independent of device and location” (Marston, Li, Bandyopadhyay, Zhang, &
Ghalsasi, 2011).
On the other hand, Near Field Communication (NFC) is a wireless system that enables
two technological devices to communicate when they are close to each other. It is a
very intuitive and simple system since it works just by “touching smart objects” (
Nagashree, Rao, & Aswini, 2014). This technology is widely used daily, since it
enables making payments with credit or debit cards, or even mobile devices, when
(continued on next page)

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Table 2 (continued )
Digital finance Description Academic articles
technology

near a cash desk NFC device. In this form, the payment is immediately transferred to
the payee.
Lastly, financial advising services demand are highly increasing. This technological
service extends to investment, credit and insurance. It is optimal to refer to it as robo-
advisor or financial advisor. They are mentioned as a technological and automated
service that gives investment and management advice without the interface of a
human advisor. They match clients with the financial products by asking several
questions through a questionnaire. However, questionnaires given by robo-advisors
Robo-advisors have been questioned, since it is not fully certain if they gather all the necessary Fein (2017), Baker and Dellaert (2017), Schoeff (2015)
information in order to meet the customer’s “best interest” (Fein, 2017).
The fact that algorithms will not behave in the consumer’s ultimate goal, makes them
being in the spotlight for regulators and policymakers. Nevertheless, if honesty and
transparency is assumed, financial advisors accelerate the process of investment
resulting in lower costs and higher speed (Baker & Dellaert, 2017), avoiding conflicts
of interests.

Examples, widely known, are some US based firms, such as Google, all the literature related to Digital Finance regulation, collaboration
Amazon, Facebook or Apple (commonly known as GAFA) and the Chi­ between Fintech firms and incumbent financial institutions, as well as
nese firms Tencent or Alibaba. Interestingly, Stulz (2019) and Carstens current challenges and future directions. Following the definition by
(2018) compare both types of markets, making a special mention to Ant Okoli (2015), a systematic literature review is “a systematic, explicit,
Financial.1 Their research shows that the US market is falling behind the [comprehensive,] and reproducible method for identifying, evaluating,
Chinese one, although reasons are not yet still clearly enough; it may be and synthesizing the existing body of completed and recorded work
due to the payment mobile system consumption of China, which rep­ produced by researchers, scholars, and practitioners”. Reviewing the
resents 16% of its total GDP, or because there is a more limited devel­ current literature allows understanding the breadth and depth of exist­
opment of payment services in the United States, due to the widespread ing articles as well as to identify potential gaps to be explored. By
use of credit and debit cards (Frost et al., 2019). However, World Bank summarizing, analyzing and synthesizing the literature related to a
(World Bank, 2018) analyzed that 82% of the unbanked population in specific topic, hypothesis can be tested and/or new theories developed
China owns a mobile device, representing a market opportunity for (Xiao & Watson, 2019).
Chinese Bigtech firms. The literature review will follow a similar structure as proposed by
Tranfield, Denyer, and Smart (2003) and Xiao and Watson (2019). The
2.4. Digital finance technology process is divided into five phases, as shown in Fig. 1.
Phase 1 is key to set the direction of the analysis carried out. It de­
By 2013 there was evidence that many of the jobs carried out today fines the goal, the research area and scope to be used for the search and
would be automated; “almost 47% of the current jobs will be at risk” analysis of academic papers. This has been done because regulators and
(Frey & Osborne, 2013). However, digital technologies are not the policymakers in the finance sector must overcome many challenges due
centerpiece of digital transformation, as the key is the combination of to new technological innovations in the field, being pertinent to address
these technologies together with a business logic that allows trans­ them jointly. Regarding collaboration, the main idea is trying to find the
forming a business into a digital business (Hanafizadeh & Kim, 2020). different partnerships among institutions in order to defeat the chal­
This section encompasses some of the different technological con­ lenges and obstacles of the sector. These are the main goals of the
cepts used by incumbents and Fintech firms in order to carry out their literature review. Therefore, the research area is academic literature on
business functions. The main technologies that will be discussed are; regulation, collaboration and challenges. Finally, a research scope must
artificial intelligence and machine learning, big data, distributed ledger be established since it is not possible to use all the literature available.
technology, cloud computing, robo-advisors and smart contracts. See However, a scope is defined in order to select the most relevant aca­
Table 2. demic papers in order to do a more critical analysis and capture the most
Besides these financial concepts, it is important to mention that there recent information available.
are other technologies, which are as well used. Examples include secu­ Phase two is to define the criteria by which academic papers are
rity technology, social media or technological devices. selected, for better provision of important results and conclusions. For
this research, academic papers dating from 2008 to 2020 will be used.
3. Methodology This period range is considered because the Digital Finance revolution
started in the financial crisis of 2008, when Fintech start-ups started to
3.1. Methodological framework emerge, as stated in the literature review. Additionally, using a period
range higher than 12 years would hinder the purpose of this analysis
The following study is an up-to-date, comprehensive and cutting- since it would not evaluate all the important details. Besides, different
edge review, which has been performed in order to present the work online databases have been used for the literature review. A database is
conclusions and gaps for future researches, of some of the most impor­ “an organized collection of structured information, or data, typically
tant issues in the financial sector, according to several global organi­ stored electronically in a computer system” (Oracle, 2020). To conduct
zations and institutions (Feyen, Frost, Gambacorta, Natarajan, & Saal, this research, different databases of academic papers have been used:
2021). A Systematic literature review will be provided in order to cover International Bureau of Economics; Scopus; Google Scholar; Emerald;
Semantic Scholar; and Science direct.
Some of these databases include high quality academic journals,
1
Ant Financial is an affiliated company of the Chinese group Alibaba. Ant which are used as well. This leads the work into phase 3, which the aim
Financial is the highest valued Fintech firm in the world. is to classify the selected articles according to specific criteria. If an

5
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Fig. 1. Phases of the literature review.

academic journal or article was not available or free in any of the da­
tabases, the corresponding academic journal website has been used. A
Table 3
criterion has been implemented in order to select the articles in the Keywords of the different research frameworks.
different journals and databases. This research is focused on articles and
Keywords
journals published in the SCImago Journal & Country Rank. It is a
research group formed by several institutions and universities (Sci­ Digital banking regulation, Fintech regulation,
regulatory Fintech institutions, digital payment
mago). They give a ranking indicator to each journal, according to a
Regulation regulation, Crowdfunding regulation, Blockchain
mathematical formula. The higher the indicator, the higher the journal regulation, Regtech, Fintech regulators, Insurtech
will be in the ranking list. According to the research area of the analysis regulation
Frameworks
and the information provided by the ranking website, two subject areas Collaboration
Fintech collaboration, Fintech partnerships, Bank
have been selected: (i) Economics, econometrics and finance, and (ii) partnerships, Fintech integration
Fintech challenges, Banking challenges, Digital
Business, management and accounting. In order to reach the final pur­
Challenges finance challenges, Future banking challenges,
pose, each article was fully and critically examined, and the ones that Bigtech challenges, Fintech risks
were fully available and finished were used.
The selection of the academic papers was carried out following a list
of keywords (keywords of the bibliographic publications should be Finally, in phases 4 and 5, the selected papers are analyzed in depth,
filtered to define the field of research) based on the three research areas. their contents are explained and conclusions are drawn to generate a
See Table 3. In order to ensure veracity, as stated in Gomber et al. simple roadmap for researchers who wish to better understand this field.
(2017), the keywords must appear in the title, abstract or keywords
section of the corresponding article. What is more, some articles were 3.2. Search and classification framework
excluded when the topic did not match the research area. For example,
an article addressing the different and current bank regulations does not As explained above, in the second phase, it is important to define the
match the research goals. selection criteria and data filtering for the articles, according to the table
The application of scientometrics can provide new and deeper in­ of keywords previously inserted. In order to do this, a data selection and
formation on the topics to be addressed. The use of scientometric filtering process has been conducted, see Fig. 2, as stated in the literature
techniques provides both a clear understanding of the evolution of review done by Ngai, Hu, Wong, Chen, and Sun (2011).
previous literature and helps to identify new areas of study (Hanafzadeh Each article has been carefully and critically examined in order to
and Marjaie, 2020). According to Chen, McCain, White, & Lin (2002), avoid any biases at the end of the analysis. Therefore, unpublished or
co-word analysis and co-citation analysis are among the most funda­ articles that are still in research were excluded. Articles expressing
mental techniques for scientometrics and science mapping. Co-citation opinions or subjective hypotheses were also excluded since clarity,
and cluster analyses based on scientometrics provide objective and brevity, accuracy, and reliability must be of crucial importance when
quantitative approaches to identify the core knowledge and academic conducting an analysis (Hart, 1998).
networks in specific fields (Liu, Li, Shen, Yang, & Luo, 2018). In order to Considering all these assumptions, 193 articles were used. In total,
carry out a deeper analysis and to observe the methodological coherence 330 papers were potentially identified. However, considering the first
approach, the technique of keyword co-citation (Braam, Moed, & Van verification process, 89 articles were eliminated, being 235 the total
Raan, 1991) is used. When two or more keywords on a specific research number of articles left to review. Out of these, 48 articles were dupli­
topic appear in the same thesis, they have essential relationships. The cated, since databases often publish the same articles.
greater the co-occurrence between two keywords, the closer their rela­
tionship (Chen, Chen, Wu, Xie, & Li, 2016). The co-citation of keywords
4. Empirical results
in research units of different levels establishes the relationships between
papers, authors, countries, etc. (Su & Lee, 2010).
4.1. Classification analysis
Cluster analysis has typically been used in traditional co-citation
analysis. In a traditional co-citation study, usually publications or au­
In conclusion, a sum of 193 articles were screened, including both
thors are grouped together, and then efforts are made to characterize the
articles and conferences from academic journals, according to the pro­
nature of the major clusters as substitutes for the specialties (Chen,
cess previously done. It is interesting to observe the evolution of
McCain, White, & Lin, 2002). In this sense, to carry out network visu­
alization, VOS Viewer software is used for classifying the keywords ac­
cording to their co-citation.

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M. Barroso and J. Laborda Digital Business 2 (2022) 100028

publication of articles throughout the period chosen, which is described pushed towards each other (Waltman et al., 2010).
in Fig. 3.2 The graph shows that, almost until the year 2014, not many On the other hand, different colors are assigned, so that each cluster
articles about regulation were published. Moreover, it was not until is represented by a different color. This means that the objects within the
2015 when the challenges and the collaboration issues were not same cluster have more similarities than the objects in a different clus­
addressed in academic journals. From these years on, articles began to ter. The different objects are also connected to each other by lines, which
rise and in the year 2017, the number of published articles for regulation represent the linkages among them.
had its peak, with 25 in total. For collaboration and challenges for the In order to follow the order of the analysis, three different maps were
sector, its peak for published ones was among the years 2018–2019, displayed, according to the three different groups analyzed: Challenges,
with 5 and 13 papers, respectively. On the other hand, the first identified Regulation and Collaboration.
paper for regulation was in 2010, and for collaboration in 2016. How­ Fig. 5 analyzed the keywords co-citation among the Fintech Chal­
ever, the first article addressing the challenges was published in 2008, lenges, displaying a total of 188 items and 9 different clusters, which
although in 2009, 2011 and 2012, no articles were identified. includes the largest number of items among the three maps. The first
Fig. 4 illustrates the three different research areas according to the one, consisting of 72 objects, included keywords such as banking crisis,
different keywords used in the search phase. The different graphs show banking regulation, default, policy maker, resilience or systemic risk.
the density of the publications according to each keyword. It can be The second cluster is made up of 53 items and gathered items like big
observed that, for instance, zero articles were found for bank partner­ data, cloud computing, machine learning, m-banking, security, vulner­
ships, as all of them addressed topics outside the research scope. They ability, etc. The third cluster is formed by 28 keywords (bitcoin,
mention several partnerships among different banks, but not between blockchain, crowdfunding, Fintech, future research, P2P, smart con­
Fintech firms and banks, which is the main goal, although these part­ tract…), and the fourth comprised 10 items (customer satisfaction,
nerships currently exist.3 regulatory change, competitive advantage, etc.). Cluster number five
Additionally, following phase 3 of Fig. 1, another method of classi­ and six are formed by 7 keywords each one, such as optimization,
fication has been chosen to visualize in a broader way the relationship mitigation or operational risk (cluster 5), and inclusion or leadership
between the selected articles. For this purpose, a database has been used (cluster 6). Cluster number seven is made up of six different items;
to classify the different keywords according to their co-citation, financial performance, Pakistan or Malasya. In the eighth cluster, there
following clustering techniques. In this sense, VOS Viewer program is were 4 items, including rapid development and digital economy, and the
used, where VOS stands for “visualization of similarities” (Heersmink, last cluster, number nine, was only formed by one keyword (Turkey).
van den Hoven, van Eck, & van den Berg, 2011). There are numerous The result of this figure summarizes how the banking sector along with
computer programs that are used for bibliometric purposes. Among Fintech companies are closely related. In addition, it shows how the
them, there can be distinguished several functionalities such as “tem­ three most important clusters in the figure summarize and interconnect
poral, geospatial, topical and network analysis” (Milian et al., 2019). the main challenges, such as regulation, together with the technology
However, the VOS Viewer program focuses more on the graphical rep­ derived from the sector.
resentation of bibliometric maps, using special labeling algorithms, The Regulation clustering map is shown in Fig. 6, including 10
zooming or density metaphors (Van Eck, Waltman, Dekker, & Van Den clusters and 121 items. The first cluster grouped 47 items like compe­
Berg, 2010). It is used in order to create maps based on network data and tition, financial regulation, consumer protection, supervision or finan­
to visualize and explore these maps. “It can be used to build networks of cial stability. The second one, formed by 41 keywords, included items
scientific publications, scientific journals, researchers, research organi­ like blockchain, data protection, algorithm, bitcoin, smart contract,
zations, countries, keywords or terms. The elements of these networks machine learning, cloud, control… Less than 10 items only formed the
can be connected by means of co-authoring, co-occurring, citation, rest of the clusters. For example, the third and fourth ones are made up
bibliographic linkage or co-citation links” (Durana et al., 2020). In this of 8 keywords each one, including digital currency, jurisdiction or
systematic literature review, the software constructed a map based on payment system (cluster 3) and digitalization, legal regulation or digital
the co-citation frequencies of the different keywords. To make it clear, economy (cluster 4). The fifth cluster contained 6 items, such as action,
the software works with different databases; Web of Science, PubMed, self-regulation or collaboration, and the sixth one included 4 keywords
Scopus, CrossRef JSON and RIS. Therefore, the software has only (ICO, success, token…). Cluster number seven involved 3 items like P2P
analyzed the academic articles of the Scopus database, since it is within or policymaker, and the eighth only had 2 different keywords (effec­
the list of this analysis. In this way, the results of the VOS Viewer would tiveness and outcome). The last two clusters, number nine and ten, were
be a sample of the complete literature review. only made of 1 item each one; technological innovation and artificial
In order to analyze the results, it is important to understand how the intelligence, respectively. The result of this figure indicates the most
maps work. As explained in Van Eck et al. (2010), the software’s cited keywords in terms of regulation. It is interesting to see how
objective is to place objects in a low dimensional space, so that the blockchain is one of the strongest words. However, when analyzing this
distance between any two objects reflects the similarity or relationship topic in depth, blockchain lacks strict regulation, compared to other
of the items as precisely as possible. In mapping, it has been shown that business models. Moreover, it is interesting to see that all cluster words
the mathematical approach followed by Waltman, Van Eck, and Noyons are related to innovation and technology, suggesting that new regula­
(2010) is equivalent to the VOS mapping technique carried out by Van tory trends should follow the same path.
Eck et al. (2010). In this sense, mathematically it is shown that the Fig. 7 shows the cluster map regarding Collaboration, according to
greater the association strength of two nodes, the greater the force of the Scopus database. There were 78 items, the lowest number with
attraction between them. Since the repulsion force between two nodes respect to the other two maps, with eight clusters. The first cluster is
does not depend on the association force of the nodes, the aggregate composed of 37 keywords, including advantage, adoption, integration,
effect of the two forces is that nodes with a high association force are innovation, Fintech, regulation, etc. 18 items, with keywords such as
attracted to each other, while nodes with a low association force are Africa, cooperation, monitoring, control or local government, formed
the second cluster. The third cluster contained 10 items (future, inter­
action, power, agreement, etc.) and the fourth one comprised 5 key­
2 words (failure, financial crisis, reform…). Finally, the last four clusters
The graph’s period is 2008–2019 because it would not be accurate to
include the current year (2020) since it has not finished yet. However, they included 3, 2, 2, and 1 keyword, respectively. Cluster number five
have been used for this project’ analysis. included keywords such as Indonesia and uncertainty. The sixth (eco­
3
An example of a partnership involves the German bank N26 with the Fin­ nomic growth and policy maker), the seventh (private company, trans­
tech Mambu, in order to use its cloud-based platform. (Mambu) formation) and the eighth (absence), were the clusters with the least

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M. Barroso and J. Laborda Digital Business 2 (2022) 100028

Fig. 2. Data selection and filtering process.

mind that 193 academic articles were found, it is probable that not all of
REGULATION COLLABORATION them will be explained in detail in order to keep focus on the research.
CHALLENGES Additionally, different subsections are displayed in order to structure the
analysis. Table 4 sums-up the research on Challenge, which is divided
into four different categories regarding the different topics: Fintech
25 Challenges, Fintech Risks, Digital Banking challenges and Regulatory
Challenges. Table 5 details the academic papers related to Regulation,
20
grouped into four subsections: Overall Regulation in Digital Finance,
15 Digital Banking Regulation, Regulatory Sandboxes and Regtech. Table 6
lists the literature review referred to Collaboration.
10 Having gathered all this information, one of the main conclusions
that can be obtained is that, within the financial sector, it is challenging
5
to innovate in a disruptive way, as it is a relatively mature sector.
0 However, the rapid disruption of Fintechs together with their rapid
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 evolution means that this market can potentially collapse, thus entailing
a systemic risk.
Fig. 3. Evolution of the three different categories (2008–2019). On the other hand, there is a clear lack of regulation towards these
firms, which has both positive and negative factors. The positive effect,
number of items. In this figure, it can be seen how the different clusters from the Fintechs’ standpoint, is that they have more “room” to develop
and their respective elements have a smaller distance among them than their respective businesses, compared to the more traditional financial
in the other figures. This may be since collaboration between the institutions. However, this can lead to a problem of financial stability,
different organizations is not still very defined and changes are still since it is the regulation itself that is responsible of this. Therefore,
needed in the sector. several mechanisms are being developed (Regtech, regulatory sand­
Finally, it can be stated that there is a connection among the three boxes…) to ensure the sector is more regulated. Finally, the most
different sections. In order to be able to see these connections, one last important outcome is the importance of collaboration between all the
map was created, including all three groups into one, which is repre­ agents in the sector in order to provide a better service to the market.
sented in Fig. 8 (composed by 17 clusters and 186 items). In this cluster Collaboration between banks and Fintechs is key for the development of
map, it can be perceived that the words technology, regulation and as­ new products and services.
sociation have the most similarities and links among all the items, since
they have the greatest nodes. Therefore, it is possible to conduct the
analysis, explained in the next section. 4.3. The digital transformation of the banking system

Banking had no choice but to embrace digitalization, completely

4.2. An analysis of the obtained results transforming the way it provides services and interacts with both com­
mercial and corporate customers, due to two main factors: the rapid
The main objective of this section is to detail the most important digitalization within all sectors that compose the economy and the rise
aspects of the academic articles previously searched and mentioned. In of new competitors in the financial sector whose model is based on new
this way, it will be possible to have a much broader and detailed vision technologies.
of the technological evolution of this sector taking into account all the IBM Institute for Business Value (IBM, 2011) conducted a study
information collected. Finally, the results obtained and collected from about the evolution of the digital transformation process. It highlights
the tables proposed in this section will be briefly outlined. Keeping in that in order to reach a digitalized scenario; companies should propose

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M. Barroso and J. Laborda Digital Business 2 (2022) 100028

Digital banking regulaon

Fintech collaboraon
Fintech regulaon
Regulatory Fintech instuons
Digital payment regulaon Fintech partnerships
Crowdfunding regulaon
Blockchain regulaon Bank partenrships
Regtech
Fintech regulators
Fintech integraon
Insurtech regulaon
0 10 20 30 40 0 10 20 30 40

Fintech challenges

Banking challenges

Digital finance challenges

Future banking direcons

Bigtech challenges

Fintech risks

0 10 20 30 40

Fig. 4. Distribution of articles according to keywords.

Fig. 5. VOS Viewer keywords from the Challenges category. (188 items in 9 clusters).

new business models based on new customers’ experience and inte­ for the legislator is to maintain a balance between financial institutions
grating new capabilities into their activities. Therefore, banks need to and the rest of the financial players, thus promoting innovation, stability
catch up to implement digitization competitively. According to Diener and consumer protection (Enria, 2017; Omarova, 2020).
and Špaček (2021), one of the keys to this is to find and attract the right However, there is still room for improvement in the digital trans­
staff who are specifically trained to deal with these issues. formation of financial institutions, which represents an opportunity for
Financial regulation should also be considered. The main challenge all those institutions that have not yet been digitalized.

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M. Barroso and J. Laborda Digital Business 2 (2022) 100028

Fig. 6. VOS Viewer keywords from the Regulation category. (121 items in 10 clusters).

Fig. 7. VOS Viewer keywords from the Collaboration category. (78 items in 8 clusters).

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M. Barroso and J. Laborda Digital Business 2 (2022) 100028

Fig. 8. VOS Viewer keywords set. (186 items in 17 clusters).

5. Discussion collaboration. However, and as already mentioned, collaboration be­

tween the sector’s agents is an essential mechanism to be able to survive
Like many other industries, the financial industry has not escaped the in the sector in the long term. Due to the advantages that Fintechs have
impact of digital technology. Although most banks have begun a clear in terms of regulation (although it may seem it generates an unleveled
process of digitization, financial institutions are generally moving for­ playing field), innovation and development of services in the sector is
ward at a slow pace, allowing start-ups and large technological com­ facilitated.
panies to become their competitors. The “attack” by these new In addition, the last cluster created (Fig. 8) specifically shows the
competitors is a reality and the threats they pose are increasingly results of the work. The words technology, regulation and partnership
important. show the most similarities and links between all the items, which means
The different services that Fintech companies offer depending on that the three topics are currently the ones that the sector is most aware
their business model have been studied. In order to develop these new of when developing new services and business models.
business models, it is necessary to implement techniques and tools that Given this scenario, academic research in the area may answer the
help in the new processes. The use of Big Data technology and ML questions provided in the introduction of the present paper. From a
predictive techniques is a reality for business success. The fact of practical point of view, the systematic literature review presented can
transforming the huge amount of existing data into useful information contribute as a step forward in continuing the intention and guidance of
allows all the agents in the market to offer new services to their clients academics regarding the proposed topic. The results can also contribute
more adapted to their real needs. to the feasibility of technology incorporation and creation of new and
Even though digitization is a current movement, there are certain innovative banks following the main drivers of Fintech success; devel­
limitations when it comes to conducting research, as information in this opment of technology, customer experience, organization culture,
field varies continuously. This is clearly seen in the systematic literature funding and government regulations (Hermawan, Septiawan, &
review carried out in this paper, where the upward trend of publications Febriani, 2019). In particular, previous studies on the research of ser­
related to the three chosen topics is also confirmed. From the 193 arti­ vices provided by banks and Fintech (Sharif, 2020; Saksonova &
cles collected in the different databases between 2008 and 2019, this Kuzmina-Merlino, 2017) are extended. In addition, studies may com­
paper performs a co-citation and cluster analysis with respect to the plement or even open new research doors, such as that of Dehnert and
research area and its main keywords. It attempts to identify the key Schumann (2022), as they concluded that traditional banking attributes,
characteristics of research on new players in the financial sector, and such as human professional expertise, remain important.
aims at help researchers, especially recent entrants, to provide a Such results help to understand how the industry is evolving in a
benchmark for future research. It was revealed that most academic ar­ holistic way, so it would not be entirely correct to focus on the in­
ticles belong to the topic of regulation, followed by challenges and novations separately by addressing them one by one, as this could lead

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M. Barroso and J. Laborda Digital Business 2 (2022) 100028

Table 4
Benchmarking the state-of-the art Challenges: an update of research.
Category Subsection Description and main ideas Relevant articles

Trying to innovate in order to create new services, in a world where

everything has already been invented, imposes new challenges.
Given the rapid rise of firms, the Fintech sector could assume a systemic
risk affecting the economic stability. However, several authors point out
the importance of regulation and how it can cope with financial stability
(Claessens, Frost, Turner, & Zhu, 2018).
Another challenge for Fintech firms is the fact they have to deal with
enormous amounts of data using technological solutions, which could
develop into a data breach, affecting firm’s market value (Unsal &
Goldfarb, Greenstein, and Tucker (2015), Jagtiani and Lemieux (2017),
Rayfield, 2019). Processing and data collection raise the problem of
Comizio (2017), Ryu (2018), Lee and Shin (2018), Kang (2018),
suffering attack security restrictions and privacy threat accounts.
Claessens et al. (2018), Carstens (2018), Arner, Zetzsche, Buckley, and
On the other hand, several authors centered their research on financial
Fintech Barberis (2019), Rachinger, Rauter, Müller, Vorraber, and Schirgi
stability problems.
challenges (2018), Wonglimpiyarat (2018), Stulz (2019), Unsal and Rayfield
Research has also investigated the challenges regarding some Digital
(35 papers) (2019), Gold and Ali (2019), Golubić (2019), Hamdani, Herlianti, and
Finance business functions, specifically, digital lending and virtual
Amin (2019), Jocevski, Ghezzi, and Arvidsson (2020), Wamba,
currency. One of the main challenges regarding the former is the risk of
Kamdjoug, Bawack, & Keogh (2020), Dhote, Pathak, and Kulkarni
default (Wonglimpiyarat, 2018). Regarding the latter, the high
(2020), Meng, He, and Tian (2021),
volatility faced and challenges in security or privacy. This high
volatility manifests itself especially in the exchange rates and the prices
of these digital currencies.
Summarizing the main challenges exposed by authors could be;
“investment management, customer management, regulation,
technology integration, security and privacy, and risk management” (
Lee & Shin, 2018). The most repeated negative effect among all the
perceived challenges is the lack of regulation in the sector, which affects
market agents and users.
Fintech risks refer to the probability of occurring a non-expected event
by firms and its consequences.
There are three main types of risks related to the rapid growth of these
firms: financial, reputational, cyber risks and data privacy risks (Ozili,
2018). Other authors also point out: operational, management and
regulation risks (Aaron, Rivadeneyra, & Sohal, 2017; Carney, 2017).
Following the lending industry trend, herding risks are as well
mentioned (Da-Silva, 2018). Herding means how the behavior of other Arner et al. (2015), Carney (2017), Aaron et al. (2017), Claessens et al.
Fintech risks
agents influences more than the behavior of the market. This conduct (2018), Ozili (2018), Da-Silva (2018), Ryu (2018), Milian et al.
(14 papers)
may increase the probability of increasing market inefficiencies. (2019), Liu, Li, and Wang (2020)
The fact of providing financial services online also enhances new types
Challenges of risks for customers. It is discussed how online banking creates credit
risks.
It can be observed that, after very rapid growth between 2013 and
2016, the most recent data indicates a slowdown in most major
jurisdictions, mainly due to risk management and lack of consumer
confidence (Claessens et al., 2018).
These challenges are very similar compared with those posed by Fintech
firms.
The use of digital platforms in traditional banking generates new
challenges for firms, like managing the potential network effects they
have on users (Jocevski et al., 2020).
Security challenges are highly mentioned, where online threats,
Digital banking commonly known as unauthorized access or hacking, are in the Donner and Tellez (2008), Low and Abdul (2013), Islam (2014), Bahl
challenges spotlight for firms and regulators (Islam, 2014). (2016), Jocevski et al. (2020), Boot, Hoffmann, Laeven, & Ratnovski
(9 papers) Interestingly, the growing relevance of digital services allows large (2021)
technology companies to engage directly with large corporate
customers and thus compete with banks in providing financial services
to this client base as well.
Regardless of the strategy followed, it is of the utmost importance for
banks to incorporate innovation to provide new answers to consumer
needs and to detect new business opportunities.
This challenge comes from those applying the new technologies and not
from the technology itself. While the banking industry is highly
regulated, Fintech firms, which provide the same or similar services, are
not subject to such strict regulations.
Regulatory arbitrage is strongly mentioned, although regulators have
not addressed a specific approach in order to mitigate it. Regulatory
arbitrage promotes Fintech activities since it may be harder to launch
Regulatory new activities in jurisdictions with relatively tight banking license and Goldfarb et al. (2015), Philippon (2016), Claessens et al. (2018), Ryu
challenges supervisory regimes (Philippon, 2016). Understanding how the (2018), Yadav and Brummer (2019), D’Silva, Filková, Packer, and
(12 papers) industry develops by balancing both risks and potential innovations Tiwari (2019)
helps in developing new regulatory strategies in order to avoid
regulatory arbitrage.
However, applying traditional regulatory strategies to new high-tech
industries may not be the solution. Part of the difficulty is managing the
trade-offs that surround the regulation of new developments that could
potentially both assist and undermine consumers (Yadav & Brummer,
2019).

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Table 5
Benchmarking the state-of-the-art Regulation: an update of research.
Category Subsection Description and main ideas Relevant articles

Regulation requires that policy makers safeguard consumer protection

and financial stability. In reality, financial supervisors have been forced
to consider ways of balancing traditional regulatory aims of financial
stability and customer protection with the objectives of innovation and
growth.
Policymakers have not yet concluded how to implement the
corresponding policies, since Fintech firms are not considered financial
institutions, even though they undertake similar activities. Banks could
easily imitate Fintech movements if they were absent of regulation,
falling under the regulatory arbitrage approach (Buchak, Matvos,
Piskorski, & Seru, 2018). In this sense, shadow banking could be
considered a threat, since they exploit the advantages given by
regulatory arbitrage because they are “free of regulatory costs” (
Navaretti, Calzolari, Mansilla-Fernandez, & Pozzolo, 2018).
Stemler (2013), Cumming and Johan (2013), Darke (2013), Gabison
The majority of articles within this subsection deal with 1)
(2014), Vismara (2016), Kakavand et al. (2017), Philippon (2016),
cryptocurrencies, 2) blockchain and 3) crowdlending;
Groshoff (2016), Guo and Liang (2016), Navaretti et al. (2018),
Vives (2017), Buchak et al. (2018), Barberis, Buckley, and Arner
Overall regulation 1. Cryptocurrencies are not regulated as their functions lead to a trust
(2017), Zetzsche, Buckley, Barberis, and Arner (2017), Ruiz (2017),
in digital finance solution, where disintermediation plays a leading role (Keidar &
Hornuf and Schwienbacher (2017), Chockalingam, Dabadghao, and
(91 papers) Blemus, 2018).
Soetekouw (2018), Anagnostopoulos (2018), Keidar and Blemus
2. Blockchain regulation has been adopted with the aim of influencing
(2018), Zetzsche, Buckley, and Arner (2018), Magnuson (2018),
the process of change and diffusion of the technology. Some authors
Weihuan, Arner, & Buckley (2015), Stulz (2019), Iman (2020),
claimed the urgent need to implement stricter regulation on this
Rodriguez, Scholl, & Pomeschikov (2021)
sector, like Guo and Liang (2016). The use of smart contracts is
becoming more consolidated, as they increase the security of
transactions and reduce the risk of fraud (Kakavand, Kost De Sevres,
& Chilton, 2017). Through smart contracts, compliance partnerships
can be created between regulators and market participants, thus
facilitating near real-time access, analysis and processing of data.
3. Regarding crowdlending, it provides countless opportunities for
investors and entrepreneurs (Stemler, 2013). Countries such as the
United States, Italy, the United Kingdom and France, opted to
establish new derogations to ease the equity crowdfunding activities
(Gabison, 2014).
Finally, although regulation may be necessary in the financial sector,
Regulation
innovation requires reinventing regulation as it is known by developing
new systems and approaches.
Although digital banking is rapidly evolving, there is still no common
approach to many digital payment services.
One of the most cited regulatory frameworks is the Second Payments
Services Directive PSD2. (Donnelly, 2016) It was set in 2016 in the EU
Digital banking Bollen (2010), Liu, Kauffman, and Ma (2015), Donnelly (2016),
in order to “integrate further and support a more efficient EU payments
regulation Zachariadis and Ozcan (2017), Vives (2019), Wolters and Jacobs
market” (Zachariadis & Ozcan, 2017). It tries to promote competition in
(9 articles) (2019)
a market where Fintech firms disrupted the payments services system.
However, it would be interesting to discuss the necessity of
implementing so much regulation, given that some researches agreed
that the less regulation, the higher efficiency boost.
Regulatory sandbox is a way of testing firms’ new products and services
in a safe and reliable environment, where companies are subject to less
exposure from regulators. Among the main activities of sandboxes are
regulatory guidance, facilitating testing in international jurisdictions
and providing Fintechs with flexibility to compete in financial markets (
Alaassar, Mention, & Aas, 2021). They also enable providing better
access to funding and encourage developing more innovative products.
Regulators require that they incorporate appropriate guarantees.
There are two key challenges; reducing the barriers to testing in the
current policy environment and ensuring that the risks that arise from
Regulatory testing new products are not transferred to consumers (Bromberg, Arner, Barberis, and Buckley (2016), Arner, Barberis, & Buckley
Sandbox Godwin, & Ramsay, 2017). (2017),Bromberg et al. (2017), Zetzsche et al. (2017), Ingle (2018),
(11 papers) Finally, there are a series of conditions to enter a regulatory sandbox, Chen (2018), Alaassar et al. (2021)
according to Zetzsche et al. (2017); firms need to meet a series of
requirements from the regulators. In addition, a scope of individual
sandbox coverage is implemented depending on the country, or firm
size. Finally, firms also run the risk of being removed from the privilege
of not participating in the regulatory sandbox anymore if requirements
are no longer met or if risks are too high.
As a conclusion, Regulatory sandboxes are a useful framework for firms
offering specialized products or services, where existing regulations
may be an obstacle to their development. This is why it would be
interesting to give more incentives to firms to participate in these.
(continued on next page)

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Table 5 (continued )
Category Subsection Description and main ideas Relevant articles

Regtech has appeared as a new regulatory solution in a more effective

and efficient approach in order to support compliance and reporting
functions (Arner et al., 2016). The possibility of a different financial
system is possible thanks to the combination of Fintech and regtech,
since the latter not only helps financial institutions to save on costs by
complying with their obligations, but also provides the opportunity for
regulators to carry out their functions in a considerably more effective
manner (Larsen & Gilani, 2017).
However, several authors, like Packin (2018), pointed out that regtech Arner et al. (2016), Zetzsche et al. (2017), Larsen and Gilani (2017),
Regtech
is not a panacea. Additionally, many of regtech’s gains have been Arne et al. (2017), Anagnostopoulos (2018), Callen-Naviglia and
(22 papers)
counterbalanced by increased regulatory requirements and their James (2018), Packin (2018)+
associated costs, such as the growing number of requests for
information issued by regulators.
Finally, smart regulation is highly mentioned as well; this new form of
regulation is necessary to address the new financial system. Smart
regulation is the result of the digitization of systems; it involves the
definition of new financial infrastructures, including digital
identification systems and frameworks for payments and other
operations (Zetzsche et al., 2017).

to overlooking the big picture of FinTech-induced changes. banking regulation on Fintechs and new technologies. Would the market
continue to grow in the same way? Would there be as much innovation,
6. Conclusions or would it stagnate? In addition, it could be inferred that the future of
academic research in this area may not focus primarily on the types of
The aim of the new digital banking system is to make the customer regulation as such, but on their underlying technological and innovative
the main driver of its operations. The development of new applications rationale. A very promising approach for academic research and for
capable of improving the user’s experience is the key tool they use to specific Fintech business models is the development of new theories, as
gain the trust of these new digital customers. Banking should focus on well as the implementation of applications and the identification of
regaining customer loyalty by offering facilities rather than imposing business models and related services (Gomber et al., 2017).
conditions. Therefore, banks that are unable to adapt could eventually Within the subcategories identified, it is remarkable that research
be displaced, and small financial institutions would disappear or would has not addressed the concept of insurance or Insurtech more inten­
have to merge with large banks in order to survive. sively. The same is applicable to the crowdfunding types, as most articles
The review of the literature presented allows us to identify the areas deal with equity crowdfunding in greater depth. This is an opportunity
that have been investigated and the areas that have not yet been for research to examine how the regulation of these functions will evolve
addressed by researchers to date. Gaps have been identified by depending on the technologies used in their operations. Moreover,
reviewing the obtained academic papers and their relationship with the numerous articles relate the blockchain technology to ICO (although it
clusters; for example, if no papers have been found on a relevant topic has not been developed in this work), which suggests that these tech­
such as the use of Robo-advisors in the sector, it is considered as a gap nologies and new methods are probably one of the great disruptors when
that could be furtherly studied by researchers. it comes to raising funds. This could be a very attractive research or
Interestingly, no major research articles were identified with regard business theme.
to insurance. Undoubtedly, the concept could be considered as fairly Having exhaustively explored all these articles, potential research for
novel. However, it is remarkable that research has not addressed this future development can be argued. For example, the existence of regu­
concept more intensively despite the fact that the first platforms in the lation on the use of the different technologies used in the sector, more
field were already established over six years ago (Gomber et al., 2017). specifically on the different algorithms involved, could be a promising
Robo-advice is another very interesting topic. However, its academic topic. Robo-advisors have also been ‘forgotten’ in research, and are a
analysis is still pending due to the novelty of such business models and to potential disruptive technology to financial functions, especially when it
the Fintechs that are offering this new approach. In this field, research comes to investment recommendations to clients. Finally, another
could address several aspects not yet deepened; for example, the interesting topic for future research would be to point out the different
different algorithms used or even the analysis of the performance service paths that countries without regulatory sandboxes are taking, as well as
offered. In addition, no mention is made of the other new players’ recommendations in these situations could be given by authors.
entrance in the industry, such as challenger banks or neobanks. This In general, within the challenges approach, most of them have been
could be an innovative approach that could also be a new focus for investigated. In addition, it could be possible to mention that today one
researchers. of the biggest challenges for the institutions within the sector are those
In relation to Digital Money, the focus is mainly on bitcoin as it related to privacy and data security. Therefore, there are numerous
represents the most important cryptocurrency in existence. Further regulations to intervene in this problem, such as the GDPR in Europe.
research on other cryptocurrencies or the interrelation of them could be However, this issue has not been found in the articles within the regu­
a potential point of future analysis. However, although most of the in­ lation category, and therefore it could have more prominence in the
dividual business functions have already been investigated, the question future.
about what market opportunities can be offered by traditional service It would also be interesting to investigate whether it would be
providers or by Fintech startups in particular, depending on the corre­ possible in the future for incumbent banks and Fintech companies to
sponding financial function, has not so far been investigated. carry out M&A transactions instead of collaborating: what the conse­
Another gap that would have potential for future research is with quences for the financial sector would be?; or, opposite to that, what
respect to regulation, which is one of the keywords of the paper. In would happen if either banks or Fintechs disappeared from the market,
general, it would be interesting to analyze or measure the impact of as the other one would become the ‘winner-takes-all’ agent? Research

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M. Barroso and J. Laborda Digital Business 2 (2022) 100028

Table 6
Benchmarking the state-of-the-art Collaboration: an update of research.
Category Description and main ideas Relevant articles

Collaboration This category is not divided in different subcategories, since all the academic Boot (2016), Oshodin et al. (2017), Zalan and Toufaily (2017), Anagnostopoulos
papers found treat the collaboration and cooperation topic in a holistic way, (2018), Drasch, Schweizer, and Urbach (2018), Hornuf, Todor, and Milan
which leaves a free gap for future investigations. (2018), Lähteenmäki, Still, and Seppänen (2018), Werth et al. (2019), Acar and
Collaboration between banks and FinTechs, although it does not yet covers a Çıtak (2019), Jocevski et al. (2020), Hanafizadeh and Marjaie (2020),
wide range of banking services to a variety of customers, it is becoming Hanafizadeh and Amin (2022).
increasingly frequent. However, FinTech have not yet been able to penetrate all
areas of banking services with the same intensity (Hanafizadeh & Amin, 2022).
However, there are situations where banks are adapting Fintech models to their
own (e.g. experimenting with blockchain technologies, or expanding their
business models into the Fintech lending space). Hanafizadeh and Marjaie
(2020) identify 4 banking business models, in which the banking-fintech
collaboration fits into the Enabler business model, as it considers them as
partners in innovation, IT infrastructure and specific segments. Even so, there
are several business areas in which there is cooperation between banks and
FinTech; e.g. Sales, Customer Management, Loans or Investment management.
All of these trends are clear evidence of the growing collaboration between
traditional and alternative sources of finance. Many authors point out the fact
that this will be fundamental for the successful development of the sector and
are key for the survival in the financial industry (Zalan & Toufaily, 2017).
Partnerships are the most popular approach. They are a good form of alliance
since they manage to increase the added value of companies and entities. These
alliances should be along the supply chain and within the scope of geography,
according to several authors. Cooperation and integration are more positive and
beneficial to total welfare than to the competitive and substitutive scenario (
Acar & Çıtak, 2019).
Other types of cooperation are acquisition, joint venture and incubation. The
use of innovation hubs to promote innovation by banks and Fintechs is also an
operation that is being carried out successfully nowadays (Oshodin, Molla,
Karanasios, & Ong, 2017), due to the collaboration carried out by regulators
and banks.

could contribute to these forthcoming debates. References

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