Translation
Original language
16.06.2025
Investments in technology
Preamble
Associate Professor Financial University under the Government of the Russian Federation Investments in technology Fintech is clearly an industry that combines financial technologies and innova tions to improve provision of financial services and simplify financial operations. Rapid development of fintech industry commenced in the last decade and this sector continues to actively develop till present. Companies actively implement ing fintech solutions have a good chance of success on the market and can stay ahead of competitors in terms of development of new products and services, this is why fintech industry is a unique business area that provides new opportunities to improve financial services and operations.
Hypothesis
Due to new technologies and innovations such as artificial intelligence, machine learning, and data analytics fintech companies can offer more con venient, fast, and efficient financial services: these are, for example, digital pay ments, online lending, investment management, insurance, as well as blockchain and cryptocurrencies. Besides, active development of financial technologies is associated with the changing needs and expectations of clients, as well as vari ous economic and political factors. Based on the above, following positive factors for fintech sector development were considered: first of all, significant increase in global investments in financial technologies in recent years, secondly, COVID-19 pandemic that forced companies and consumers to actively seek digital solutions for financial operations, thirdly, regulation of fintech sector aimed at its successful functioning and scaling, fourthly, rapid development of import substitution pro cesses that promote development of domestic fintech market and stimulate com petition on it. Russian solutions of 2022-2023 were considered as an example of active development and implementation of fintech solutions under conditions of sanctions and refusal fr om imported technologies. Based on the above factors and statistical analysis of data for different periods of time, positive correlation between f intech development and considered factors will be established.
Effects
Prior to formulation of a definition for fintech, it is worth starting with the fact that there is no generally accepted concept for it. On one hand, financial technolo gies mean software and other modern technologies used by enterprises providing automated and improved financial services, on the other hand, fintech is defined as an industry comprised of multiple companies that improve efficiency of financial systems. Based on these definitions it is possible to state that financial technologies are an integral system that joins the sectors of innovative technologies and financial services and related infrastructure: thus, fintech has a wide scope of application and is divided into such segments as payments and transfers, digital banking, financing, wealth management, business support, insurance, and regulatory technologies.
The main role of fintech is to enable digital transformation of various areas with financial services through new financial technologies, such as, for example, artificial intelligence (AI), machine learning (ML), and Internet of things (IoT) that allow optimization and significant reduction in operational costs of financial ser vices, as well as improvement of reliability and speed of their provision. Thus, fin tech enable time and money savings through financial services in digital format, which, in turn, meets the needs of modern society. On the other hand, financial technologies provide businesses with the opportunity to optimize their business processes, as well as to create new business models and products.
Although fintech sphere is quite “young,” as it appeared in late 20th century, at present, it is spreading on the world market at extremely high pace: thus, the global f intech penetration index as of 2015 was 16% and 33% in 2017. Already in 2017 the average fintech market index on such emerging markets as, for example, China, Brazil, India and South Africa, was approximately 50%. In 2019, the global fintech service penetration index almost doubled as compared to 2017 and amounted to 64% while the leaders in terms of this index were China and India with 89% and 87%, respectively. Similarly to the global index, all-Russian one shows stable growth: in 2017, in amounted to 43%, and it was 82% in 2019, i.e. in 2017 - 2019 this index in Russia almost doubled, similarly to the global one.
Development of fintech sector around the world became possible due to a number of factors, one of which is the rapidly increasing amount of global invest ments in fintech companies: USD 22.2 billion in 2015 and USD 42.5 billion in 2019. Besides, it shall be mentioned that financial technology market is currently leading in terms of investment dynamics among others.
Another factor that affected active development of the fintech sector is COVID-19 pandemics that extremely negatively affected both the global financial sector and global economy in general. COVID-19 provided the basis for accelerated f intech integration into global economy, as financial technologies facilitate remote provision of financial services. An example of such integration was development of electronic banking: global banks developed multiple online platforms using con tactless payments and providing various online financial services that are actively used by the clients. A research by deVere Group financial advisory firm found that soon after commencement of COVID-19 pandemics the use of native fintech apps in Europe increased by 72%. In turn, in Russia, during the pandemics approx imately 43% of clients preferred cashless payments over cash ones, 22% started to use cards and other means of payment instead of cash, approximately 50% of clients began to use contactless cards more actively, and 16% used contactless pay ments for the first time.
Getting back to fintech, its main driving force is the high cost of financial inter mediation. Besides, fintech implies influx of investments into cloud infrastructure and analytics, as it is oftentimes associated with big data. Thus, fintech has seen great development in the area of data analysis and machine learning.
Economic development is possible only based on development of the real sec tor of economy, i.e. industrial production. This is the course used by most developed countries. Development of this sector ensures increased employment and produc tivity, as well as improved production culture and increased domestic demand. Thus, the notion of import substitution implies following - the process of a single country in the economy, wh ere the state produces necessary products relying on domestic manufacturers. Let’s discuss China as an example of import substitution, as its model is based on priority development of domestic market and reduced dependency on foreign technologies and supplies of component parts for the key hi-tech industries. Chinese import substitution policy is called “smart” because it is based on and assumes active use of external factors and support of globalization.
In this connection, Russia under conditions of the sanctions pressure only accelerated its import substitution policy, one of the basics of which shall be breakthrough development of enterprises in the context of changing technologi cal order. Creation of production information ecosystems that include digital sys tems and modern technologies will ensure synergistic effect, which will positively affect enterprise loading and sales and reduce operational costs, as well as manual processing of operations. Thus, this will improve financial indices of companies. Achievement of the goals requires Russian microelectronics and software market, of course, with the help of government support programs. Development in this area will promote leveling out of the technological gap with the West. Besides, in the context of globalization, it is necessary to promote and develop international expansion, i.e. expansion of the company’s activities outside of its country, which increases sales. The main method here is export of goods and services. However, this method is limited due to the sanctions pressure.
Possible prospects for the state include immediate control of funds (corrup tion, money laundering), for business these are fast transfers, reduced cash flow gaps, and better growth opportunities, for private clients these are the possibility of offline payments and use of a system similar to pay-service. In addition, intro duction of ruble value reduces the cost of transactions. Digital ruble also is and can compete with and be an alternative to global payment systems. However, its implementation is associated with the threat of destruction of the existing banking system, for example, due to outflow of deposits or the risk of loss of commercial banks’ liquidity.
Conclusions
At present, development of fintech is of great relevance, frequency of its use is growing both among the population and among companies, organizations, and states. This is due to the fact that it uses modern IT solutions not only to speed up and facilitate the work in the financial sector, but also makes it more flexible, scaleable, resilient, and accessible. Over the last 3 years, there has been a huge increase in implementation and use of fintech. In future, this pace will not only be maintained, but will also grow steadily. Factors having positive external influence on fintech industry development were analyzed and confirmed. The link between positive impact of COVID-19 and the leap in financial technology development was revealed. Besides, positive impact of investments and import substitution policy on the search for and formation of new solutions that are actively used in f intech sector was confirmed. Of course, regulation also has its place in this pro cess, as it guides it towards successful functioning and influences scalability of this sector. Besides, examples of import substitution under the influence of sanctions were analyzed using the example of Russian solutions of 2022-2023. Based on the above factors and analysis of data for different periods of time positive correlation between fintech development and factors considered was identified successfully.
Associate Professor Financial University under the Government of the Russian Federation Investments in technology Fintech is clearly an industry that combines financial technologies and innova tions to improve provision of financial services and simplify financial operations. Rapid development of fintech industry commenced in the last decade and this sector continues to actively develop till present. Companies actively implement ing fintech solutions have a good chance of success on the market and can stay ahead of competitors in terms of development of new products and services, this is why fintech industry is a unique business area that provides new opportunities to improve financial services and operations.
Hypothesis
Due to new technologies and innovations such as artificial intelligence, machine learning, and data analytics fintech companies can offer more con venient, fast, and efficient financial services: these are, for example, digital pay ments, online lending, investment management, insurance, as well as blockchain and cryptocurrencies. Besides, active development of financial technologies is associated with the changing needs and expectations of clients, as well as vari ous economic and political factors. Based on the above, following positive factors for fintech sector development were considered: first of all, significant increase in global investments in financial technologies in recent years, secondly, COVID-19 pandemic that forced companies and consumers to actively seek digital solutions for financial operations, thirdly, regulation of fintech sector aimed at its successful functioning and scaling, fourthly, rapid development of import substitution pro cesses that promote development of domestic fintech market and stimulate com petition on it. Russian solutions of 2022-2023 were considered as an example of active development and implementation of fintech solutions under conditions of sanctions and refusal fr om imported technologies. Based on the above factors and statistical analysis of data for different periods of time, positive correlation between f intech development and considered factors will be established.
Effects
Prior to formulation of a definition for fintech, it is worth starting with the fact that there is no generally accepted concept for it. On one hand, financial technolo gies mean software and other modern technologies used by enterprises providing automated and improved financial services, on the other hand, fintech is defined as an industry comprised of multiple companies that improve efficiency of financial systems. Based on these definitions it is possible to state that financial technologies are an integral system that joins the sectors of innovative technologies and financial services and related infrastructure: thus, fintech has a wide scope of application and is divided into such segments as payments and transfers, digital banking, financing, wealth management, business support, insurance, and regulatory technologies.
The main role of fintech is to enable digital transformation of various areas with financial services through new financial technologies, such as, for example, artificial intelligence (AI), machine learning (ML), and Internet of things (IoT) that allow optimization and significant reduction in operational costs of financial ser vices, as well as improvement of reliability and speed of their provision. Thus, fin tech enable time and money savings through financial services in digital format, which, in turn, meets the needs of modern society. On the other hand, financial technologies provide businesses with the opportunity to optimize their business processes, as well as to create new business models and products.
Although fintech sphere is quite “young,” as it appeared in late 20th century, at present, it is spreading on the world market at extremely high pace: thus, the global f intech penetration index as of 2015 was 16% and 33% in 2017. Already in 2017 the average fintech market index on such emerging markets as, for example, China, Brazil, India and South Africa, was approximately 50%. In 2019, the global fintech service penetration index almost doubled as compared to 2017 and amounted to 64% while the leaders in terms of this index were China and India with 89% and 87%, respectively. Similarly to the global index, all-Russian one shows stable growth: in 2017, in amounted to 43%, and it was 82% in 2019, i.e. in 2017 - 2019 this index in Russia almost doubled, similarly to the global one.
Development of fintech sector around the world became possible due to a number of factors, one of which is the rapidly increasing amount of global invest ments in fintech companies: USD 22.2 billion in 2015 and USD 42.5 billion in 2019. Besides, it shall be mentioned that financial technology market is currently leading in terms of investment dynamics among others.
Another factor that affected active development of the fintech sector is COVID-19 pandemics that extremely negatively affected both the global financial sector and global economy in general. COVID-19 provided the basis for accelerated f intech integration into global economy, as financial technologies facilitate remote provision of financial services. An example of such integration was development of electronic banking: global banks developed multiple online platforms using con tactless payments and providing various online financial services that are actively used by the clients. A research by deVere Group financial advisory firm found that soon after commencement of COVID-19 pandemics the use of native fintech apps in Europe increased by 72%. In turn, in Russia, during the pandemics approx imately 43% of clients preferred cashless payments over cash ones, 22% started to use cards and other means of payment instead of cash, approximately 50% of clients began to use contactless cards more actively, and 16% used contactless pay ments for the first time.
Getting back to fintech, its main driving force is the high cost of financial inter mediation. Besides, fintech implies influx of investments into cloud infrastructure and analytics, as it is oftentimes associated with big data. Thus, fintech has seen great development in the area of data analysis and machine learning.
Economic development is possible only based on development of the real sec tor of economy, i.e. industrial production. This is the course used by most developed countries. Development of this sector ensures increased employment and produc tivity, as well as improved production culture and increased domestic demand. Thus, the notion of import substitution implies following - the process of a single country in the economy, wh ere the state produces necessary products relying on domestic manufacturers. Let’s discuss China as an example of import substitution, as its model is based on priority development of domestic market and reduced dependency on foreign technologies and supplies of component parts for the key hi-tech industries. Chinese import substitution policy is called “smart” because it is based on and assumes active use of external factors and support of globalization.
In this connection, Russia under conditions of the sanctions pressure only accelerated its import substitution policy, one of the basics of which shall be breakthrough development of enterprises in the context of changing technologi cal order. Creation of production information ecosystems that include digital sys tems and modern technologies will ensure synergistic effect, which will positively affect enterprise loading and sales and reduce operational costs, as well as manual processing of operations. Thus, this will improve financial indices of companies. Achievement of the goals requires Russian microelectronics and software market, of course, with the help of government support programs. Development in this area will promote leveling out of the technological gap with the West. Besides, in the context of globalization, it is necessary to promote and develop international expansion, i.e. expansion of the company’s activities outside of its country, which increases sales. The main method here is export of goods and services. However, this method is limited due to the sanctions pressure.
Possible prospects for the state include immediate control of funds (corrup tion, money laundering), for business these are fast transfers, reduced cash flow gaps, and better growth opportunities, for private clients these are the possibility of offline payments and use of a system similar to pay-service. In addition, intro duction of ruble value reduces the cost of transactions. Digital ruble also is and can compete with and be an alternative to global payment systems. However, its implementation is associated with the threat of destruction of the existing banking system, for example, due to outflow of deposits or the risk of loss of commercial banks’ liquidity.
Conclusions
At present, development of fintech is of great relevance, frequency of its use is growing both among the population and among companies, organizations, and states. This is due to the fact that it uses modern IT solutions not only to speed up and facilitate the work in the financial sector, but also makes it more flexible, scaleable, resilient, and accessible. Over the last 3 years, there has been a huge increase in implementation and use of fintech. In future, this pace will not only be maintained, but will also grow steadily. Factors having positive external influence on fintech industry development were analyzed and confirmed. The link between positive impact of COVID-19 and the leap in financial technology development was revealed. Besides, positive impact of investments and import substitution policy on the search for and formation of new solutions that are actively used in f intech sector was confirmed. Of course, regulation also has its place in this pro cess, as it guides it towards successful functioning and influences scalability of this sector. Besides, examples of import substitution under the influence of sanctions were analyzed using the example of Russian solutions of 2022-2023. Based on the above factors and analysis of data for different periods of time positive correlation between fintech development and factors considered was identified successfully.
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