A Case Study of FinTech in Banking; A Comparison of the Developing and Developed World

With advances in financial technology (FinTech), startup firms search for ways to revolutionize all aspects of financial industries especially in the banking sector. New firms attempt to provide more affordable credit or more customized services to steal market share from traditional banks. Researchers have analyzed collaboration between FinTech firms and banks and have also examined the demographics and locations targeted by FinTech firms. This study analyzes the performance of the stock of two FinTech companies in both the developed (LendingClub) and developing worlds (Safaricom). Furthermore, it looks at the business environment risks faced by both companies. After using financial metrics to evaluate stock performance, Safaricom outperformed both the traditional bank proxy as well as LendingClub. Based on risks in the business environment, it was determined that both companies face a major risk due to regulation. Traditional banks, already operating in a heavily regulated environment, do not face the same threat