FinTech 4.0: The Superpower of Digital (Platforms) Economy

In the 18th edition of this newsletter entitled "Digital Economy 4.0: From Industry to Education, Web, and Research," it was concluded that the concepts that appeared a decade ago in the industrial sector leading to what we call "Industry 4.0" have already successfully diffused into many sectors and have shown significant impact on the most recent fields of the "Digital Economy" including the "Education 4.0", "Web 4.0" and "Research 4.0". Furthermore, in the same edition, other impacted sectors were mentioned briefly, such as "Supply Chain 4.0" and, finally, "FinTech 4.0", which will be the focus of this edition.

Before proceeding with the discussion, we must accurately define "FinTech" as an innovative industry. By definition, FinTech, in general, is the industry field that combines finance and technology to revolutionize traditional "Financial Value-Added Services." It leverages and capitalizes on emerging technologies, including artificial intelligence, big data, blockchain, analytics, cloud computing, cyber security, biometrics, and others, to enhance the efficiency, accessibility, and security of financial transactions. The most evident advantage of FinTech is its ability to expand the reach of its financial services to include underserved populations. Despite the challenges of the COVID-19 pandemic across the years 2020, 2021, and 2022, this period has provided a significant boost to the FinTech industry all over the globe for many apparent reasons, mainly providing safe and convenient means for managing finance for individuals and businesses.

However, in the current digital economy, "Technology Giants" play a significant role either in the innovation realm or in the scale of impact of this innovation. By 2023, some of these giants, such as Apple, Microsoft, and Alphabet, had a market capitalization value that exceeds one trillion US dollars. Two out of three of these giants own two of the most enormous FinTech applications worldwide: "Apple Pay" and "Google Pay." Not surprisingly, the business model of these tech giants is not the traditional known business model, but the business model that can be called a "Digital Platform Business Model."

The digital platforms business model is the business model in which the company creates and operates a "Digital Platform" that connects "Multisided Markets" and facilitates transactions or interactions between them. By providing digital platform-based solutions like Apple Pay and Google Pay, they were able to capture a significant portion of the growing FinTech market and dominate the FinTech industry. This digital platform business model, in general, and specifically in the FinTech industry, has proven to be highly disruptive, forcing traditional businesses to follow or risk being left behind in this rapidly evolving "Digital Platforms Economy."

Only now, and as a conclusion, can a concrete definition be provided for what we call the "FinTech 4.0." FinTech 4.0 is the financial value-added services offered through "Digital Platforms" that connect multisided markets. Although famous FinTech 4.0 services came from technology giants, as they were the pioneers in this field and were able to capture the first-mover advantages, this "Digital Platform-Based FinTech Business Model" is going to become the superpower and the catalyst at the same time, of the digital economy or, more accurately, the "Digital (Platforms) Economy."