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Sustainability in FinTechs: An Explanation through Business Model Scalability and Market Valuation

Roberto Moro-Visconti (), Salvador Cruz Rambaud () and Joaquín López Pascual ()
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Roberto Moro-Visconti: Department of Economics and Business Management Sciences, Università Cattolica del Sacro Cuore, 20123 Milan, Italy
Salvador Cruz Rambaud: Departamento de Economía y Empresa, Universidad de Almería, 04120 Almería, Spain
Joaquín López Pascual: Departamento de Economía de la Empresa, Universidad Rey Juan Carlos, 28032 Vicálvaro, Spain

Authors registered in the RePEc Author Service: Roberto Moro Visconti

Sustainability, 2020, vol. 12, issue 24, 1-24

Abstract: Framework : Financial Technology (FinTech) is an industry composed of diversified firms that combine financial services with innovative technologies. The research question and main goal are attempting to answer whether they are more similar to traditional banks or trendy technological firms deploying their innovativeness to favor financial inclusion and sustainability. Justification : Evaluators may wonder if FinTechs follow the typical evaluation patterns of bank/financial intermediaries or those of technological firms. Preliminary empirical evidence shows that the latter interpretation is the one consistent with the stock-market mood. Objective : This study goes beyond the extant literature, analyzing the differences between FinTechs and traditional banks in market valuation, and showing the potential for digital interaction and cross-pollination of complementary business models. Methodology : The differences will be empirically analyzed with the stock market valuation and the multipliers associated with these firms. Results : The main contribution of this paper is that the appraisal approaches of FinTechs follow those of technological startups, having a revenue model much more scalable than that of a typical bank. FinTechs may so provide a solution for sustainable finance with microfinance and crowdfunding among others. FinTechs and traditional banks may eventually converge towards a common market exploiting co-opetition strategies.

Keywords: financial innovation; value chains; scalability; digital platforms; financial ecosystem; discounted cash flows; market value; Sustainable Development Goals (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2020
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