The Risk Landscape within FinTech and InsurTech Business Models

A special issue of Risks (ISSN 2227-9091).

Deadline for manuscript submissions: closed (31 July 2021) | Viewed by 26641

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Special Issue Editors

1. Faculty of Business, Management and Economics, University of Latvia, LV-1586 Riga, Latvia
2. Faculty of Economics, Management and Accounting, University of Malta, MSD 2080 Msida, Malta
3. Faculty of Economics, Catholic University of the Sacred Heart, 20122 Milan, Italy
Interests: InsurTech; insurance law and regulations; financial services
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Special Issue Information

The FinTech/InsurTech-based business models are gradually maturing and disrupting the offering and management of financial services (banking, financial and insurance) on the global stage. However, the understanding of the risk landscape of the FinTech and InsurTech business models remains at an early stage due to the diverse nature of their activities and the rapid development of the field. Although FinTech and InsurTech offer the opportunity to accelerate economic growth and expand financial affordability/inclusion in all countries, they pose new risks to financial stability and integrity.

This Special Issue aims to compile high-quality papers that offer a discussion of state-of-the-art developments or introduce new theoretical or practical advances in the identification, measurement and management of the risks arising from the FinTech/InsurTech-based business models. We welcome papers related but not limited to the following topics:

  • Operational risks including those related to third-party service providers;
  • Macro-financial risks;
  • Micro-financial risks;
  • Risks related to the design and product governance
  • Distribution risks including those from robo-advice
  • Cyber risk and cyber security;
  • Underwriting risk, discrimination risk;
  • Cross-border legal issues and regulatory arrangements;
  • Governance and disclosure frameworks for big data analytics;
  • Internal controls system and corporate governance;
  • Artificial intelligence, privacy;
  • Algorithmic and machine learning;
  • Anti-money laundering and countering terrorist financing.

Prof. Dr. Ramona Rupeika-Apoga
Prof. Dr. Pierpaolo Marano
Guest Editors

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Keywords

  • FinTech
  • InsurTech
  • Operational risks
  • Cyber risks
  • Financial risks
  • Governance

Published Papers (5 papers)

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Research

18 pages, 790 KiB  
Article
Digital Banking in Northern India: The Risks on Customer Satisfaction
Risks 2021, 9(11), 209; https://doi.org/10.3390/risks9110209 - 17 Nov 2021
Cited by 49 | Viewed by 9957
Abstract
The widespread use of digital technologies and the current pandemic (COVID) have fueled the need and call for digital transformation in the banking sector. Although this has various benefits, it is a disruption to the norm to which a bank customer has to [...] Read more.
The widespread use of digital technologies and the current pandemic (COVID) have fueled the need and call for digital transformation in the banking sector. Although this has various benefits, it is a disruption to the norm to which a bank customer has to become accustomed. This variance means that customers would have to make some changes to their routine. This can constitute risks in terms of maintaining customer satisfaction at previous levels. These risks are associated with customer retention because a service or product needs to be aligned with customer expectations to avoid them switching to other service providers. Moreover, it can also have an effect on reputation. Offering digital account opening or remote deposits may not satisfy customers; competitive advantage depends on many aspects such as providing a hassle-free, personalized and cyber-secure experience, economic aspects and the needs of the society at large. Therefore, there is a need to understand the intensity of the risk factors that influence customer satisfaction for digitalized banking services and products. To do this, we carried out a structured survey, framed on the five dimensions of the SERVQUAL model, which was sent out to Northern Indian banking customers, to which we received 222 valid responses. We subjected the data received to Structural Equation Modelling using the SmartPLS version 3 application software. Results reveal that digital banking customers in Northern India are genuinely satisfied with the quality of services provided by digital banking. Moreover, ‘reliability’ has the strongest risk factor impact on customer satisfaction, followed by ‘tangibility’ and ‘responsiveness’. Full article
(This article belongs to the Special Issue The Risk Landscape within FinTech and InsurTech Business Models)
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12 pages, 331 KiB  
Article
Regulation of InsurTech: Is the Principle of Proportionality an Answer?
Risks 2021, 9(10), 185; https://doi.org/10.3390/risks9100185 - 19 Oct 2021
Cited by 1 | Viewed by 3662
Abstract
In the view of the current discussion on how to regulate the emerging InsurTech companies, if at all, the author attempts to demonstrate that rather than automatically introducing new regulation, the principle of proportionality can, in most cases, help to adapt application of [...] Read more.
In the view of the current discussion on how to regulate the emerging InsurTech companies, if at all, the author attempts to demonstrate that rather than automatically introducing new regulation, the principle of proportionality can, in most cases, help to adapt application of the existing rules and policy approaches to the InsurTech business models without incurring major regulatory changes. An example of peer-to-peer platforms is used to show how the specificity of each InsurTech company can be grasped by the three key criteria of proportionality: nature, scale and complexity. Full article
(This article belongs to the Special Issue The Risk Landscape within FinTech and InsurTech Business Models)
23 pages, 1328 KiB  
Article
FinTech in Latvia: Status Quo, Current Developments, and Challenges Ahead
Risks 2021, 9(10), 181; https://doi.org/10.3390/risks9100181 - 14 Oct 2021
Cited by 18 | Viewed by 3710
Abstract
FinTech has been in the focus of discussion for quite some time. However, the market share of FinTech companies is still relatively small compared to that of more traditional financial services. The purpose of this paper is to analyse the status quo, current [...] Read more.
FinTech has been in the focus of discussion for quite some time. However, the market share of FinTech companies is still relatively small compared to that of more traditional financial services. The purpose of this paper is to analyse the status quo, current developments, and challenges ahead for the Latvian FinTech sector. We combine three analyses: a political and legal, economic, social, and technological environment (PEST) analysis; a survey among FinTech companies; and an analysis of the size and financial performance of FinTech companies during the last 10 years. We find that the current status of regulation is one of the main obstacles to FinTech development, because it does not sufficiently consider FinTech-specific aspects. Problems in attracting a skilled workforce and an environment that is not very supportive of new developments in finance are further challenges and might explain at least part of the growth and financial performance difficulties. A revision, modernization, and harmonization of regulation is essential to create a level playing field for all market participants: FinTech companies, traditional financial service providers, and those originally traditional players that are integrating FinTech solutions in their business model. Further efforts are also required to foster Latvia’s attractiveness for a skilled workforce. We hope that this study helps increase the visibility of Latvian FinTech and contributes to the development of the new Latvian FinTech strategy. Full article
(This article belongs to the Special Issue The Risk Landscape within FinTech and InsurTech Business Models)
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11 pages, 339 KiB  
Article
Management of Distribution Risks and Digital Transformation of Insurance Distribution—A Regulatory Gap in the IDD
Risks 2021, 9(8), 143; https://doi.org/10.3390/risks9080143 - 02 Aug 2021
Cited by 4 | Viewed by 3380
Abstract
The Insurance Distribution Directive (IDD) aims to regulate insurance distribution in the EU regardless of distribution channels and means. Although new technologies affect insurance distribution, the IDD does not explicitly regulate this digital transformation. Insurers and intermediaries must comply with detailed business conduct [...] Read more.
The Insurance Distribution Directive (IDD) aims to regulate insurance distribution in the EU regardless of distribution channels and means. Although new technologies affect insurance distribution, the IDD does not explicitly regulate this digital transformation. Insurers and intermediaries must comply with detailed business conduct rules that aim to counteract distribution risks. However, the IDD exempts ancillary insurance intermediaries from its scope when they meet certain conditions. The article highlights the regulatory framework on insurance, requiring insurers and intermediaries to address distribution risks, and analyses how this exemption affects the management of distribution risks in online distribution from a legal perspective. The focus on online distribution depends on the scale such distribution can achieve. The consideration of the scale allows for challenging the political choice behind the exemption of ancillary insurance intermediaries, which consists of the principle of proportionality. A regulatory proposal to counteract these adverse effects is to remove the exemption from the IDD rules for ancillary intermediaries in online distribution. Such a proposal is compliant with the principle of technological neutrality and is in line with the new legislative proposals in the Digital Services Act and Digital Markets Act. Full article
(This article belongs to the Special Issue The Risk Landscape within FinTech and InsurTech Business Models)
27 pages, 723 KiB  
Article
Triggers and Obstacles to the Development of the FinTech Sector in Poland
Risks 2021, 9(2), 30; https://doi.org/10.3390/risks9020030 - 01 Feb 2021
Cited by 8 | Viewed by 4493
Abstract
The article aims to show the opportunities for the formation of new FinTech startups in Poland and further development of the sector, as well as to identify the most critical threats. The study offers the descriptive and deductive analysis based on the literature [...] Read more.
The article aims to show the opportunities for the formation of new FinTech startups in Poland and further development of the sector, as well as to identify the most critical threats. The study offers the descriptive and deductive analysis based on the literature review. The empirical part relies on the data from external databases as well as the dataset collected in a survey run among the FinTechs in Poland in January 2020. The paper reveals that Poland is a fast-growing FinTech market which satisfies various requirements such as the number of secure Internet servers, mobile telephone subscriptions, the available labor force, as well as growing tertiary education enrolment. The crucial obstacles to the development of the sector is the uncertainty about the availability of skilled workers in the future and the lack of proper legal regulations. Full article
(This article belongs to the Special Issue The Risk Landscape within FinTech and InsurTech Business Models)
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