Abstract

In the last decade, innovation activity in the financing industry has been moving to entities commonly labelled Fintech amid a wider phenomenon of decentralised finance in which financial functions migrate away from the traditional core of intermediaries, infrastructures, and instruments. Fintech refers to solutions for innovative products, services and processes in the financial industry that could improve, complete and/or disrupt existing financial products and services. Decentralisation of financial intermediaries is evidenced by the emergence of Fintech players from outside the traditional financial sector as well as by finance embedded in non-financial digital platforms. As for the decentralisation of infrastructure, processes and the instruments, technology is enabling fundamentally different approaches to the provision of financial services and to the creation of new assets which do not follow the traditional asset-liability model. Fintech also apply to incumbent financial institutions that adopt similar business models.
There is no internationally accepted harmonised definition of Fintech for statistical or for other classification purposes. The most commonly used definition is that of the FSB defining Fintech broadly as “technologically enabled innovation in financial services that could result in new business models, applications, processes or products with an associated material effect on financial markets and institutions and the provision of financial services.”
This paper clarifies the scope of (current) Fintech activities to support their classification in statistical systems, thereby enabling their monitoring. Novel Fintech activities entailing financial intermediation and financial auxiliary functions should be identified and classified in an appropriate place in the statistical systems. Currently, many Fintech services are not included in activities or product classifications entries for financial intermediation and auxiliary functions. The possibility of introducing new classification entries or complementary explanatories notes is discussed, taking as a point of departure the current NACE 2.1 hierarchical structure in section L and distinguishing within the Fintech universe between the novel activities, old activities done in a new way, and activities which are not financial.

The paper aims to serve as an input to any discussions on Fintech in the context of future work on statistical classifications, e.g. in the remaining stages of the current reviews of the NACE or other national European classifications, the International Standard Industrial Classification of All Economic Activities (ISIC) and the classifications of products (CPC/PA). Importantly, this paper continues the central banks’ work on statistical classification of Fintech and largely completes the outlined road-map to construct Fintech statistics envisaged in the IFC Report Towards monitoring financial innovation in central bank statistics . Finally, the topic of this paper fits well in the context of the new Data Gap Imitative (DGI) currently discussed with workplan covering recommendations under four main statistical and data priorities, of which priority three focuses on Fintech and financial inclusion.