The evolution of technology-related information stimulates strong product and business model innovation in many sectors of the financial industry. FinTech concerns the digitization of the banking and financial system, which uses technology to make the system itself more efficient. In particular, the term FinTech is generally used to refer to financial innovation made possible by technological innovation, which can result in new business models, processes, or products, as well as new market players. The nature of the relationship between technological innovation and financial intermediation is the subject of further study; the changes taking place in the financial services markets, driven by technology, have a very profound strategic significance.

FinTech, an acronym of the first syllables of FINancial TECHnology, is the segment that encompasses companies that provide financial products and services through new digital technologies. These companies are typically start-ups, i.e. companies that have just been formed or have been in existence for a short time and whose objective is to innovate existing traditional services.

FinTech companies are active

• in the field of digital payments;
• in money management, i.e. money management techniques;
• in wealth and asset management, i.e. the management/investment of savings (robo advisory);
• in capital marketing and trading, i.e. the buying and selling of instruments on the financial markets;
• in lending, i.e. in loans and/or mortgages (often through social channels and peer-to-peer platforms);
• in crowdfunding, i.e. investment in the capital of unlisted projects or companies;
• in insurance (InsurTech);
• in the regulatory sphere (RegTech); in the security sector.

Online trading is the buying and selling financial instruments (shares, bonds, certificates, ETFs, etc.) via the Internet. It was born in Italy in 1999, when the ‘Nuovo Regolamento Consob di attuazione del Testo Unico dei mercati finanziari’ regulated its aspects.

The advantages of using this type of online service are:

• lower commissions;
• The ability to access valuable and detailed information on securities and markets to make more informed investment choices.

• Turning trading into betting with speculative intent;
• Cognitive biases, i.e. constructs/preconceptions based on wrong or distorted perceptions, prejudices and ideologies; often used to make decisions without the right mental commitment. They are therefore cognitive biases that can be found in everyday life, on decisions, behaviour and thought processes. Cognitive biases are classified into five categories:
• Anchoring
• Cost
• Desire
• Framing
• Representation
• Financial leverage through which a party can buy or sell financial assets for an amount exceeding and multiple of the capital held and, consequently, benefit from a higher potential return than from a direct investment in the underlying asset and, conversely, expose itself to the risk of very significant losses.

Crowdfunding is the raising of venture capital through online portals.

Crowdfunding (from the crowd – crowd and funding – funding), or collective financing in Italian, is a collaborative process of a group of people using their money in common to support the efforts of individuals and organisations. It is a bottom-up microfinancing practice that mobilises people and resources.

The primary forms of crowdfunding are as follows:

• Reward crowdfunding: individuals donate to a project or business activity expecting to receive a non-financial reward such as goods or services in return for their contribution at a later stage.
• Collective donation funding (donation crowdfunding): individuals donate small amounts to contribute to the broader funding objectives of a given charitable project without receiving any financial or material compensation.
• Equity crowdfunding: the sale of a stake in a company to several investors in exchange for the investment. It is similar to buying or selling ordinary shares on the stock exchange or via a venture capital deal.
• Peer-to-peer lending: web platforms that connect two parties, lenders and applicants.

Lenders, also called peer-to-peer lenders, are private citizens or companies belonging to the European Union who decide to invest their money within peer-to-peer lending platforms.

To be able to lend money to others, you have to register on a platform, transfer the sum to be invested and select the loans you want to finance.

Applicants, also called peer-to-peer borrowers, are private citizens or companies belonging to the European community who have applied for peer-to-peer loans through a social lending platform.

After uploading its data into the system, the platform assesses the applicant’s financial strength and, if positive, offers the loan to investors. In recent years, the market has exploded, and more than 350 platforms in Europe now specialise in providing peer-to-peer lending services. Some platforms are regulated by supervisory authorities, while others are unregulated. In Italy, for example, they are authorised by the Bank of Italy, but they can sometimes operate abroad without any licence.