Fintech vs Traditional Bank: what changes in business financing

Abstract

The Italian banking system is an important component of the Italian economy, given banks play a critical role in corporate financing and has experienced important transformation in recent decades as a result of technological development and globalization of financial services. Companies providing financial services that, in the past, were only offered by financial intermediaries that were subject to specific regulation are now being provided by businesses that are known to as Fintechs. The relationship between customers and banks is evolving as a result of the increased availability of financial goods made possible by the utilization of digital resources. Customers are progressively being pressured to choose the new operators that are more efficient, and the services that are given by traditional banks are being compared with those that are supplied by growing FinTech companies. In this article, the historical evolution of Fintech institutes is examined, along with a more in-depth investigation of the elements that regulate the bank-to-business interaction, with an emphasis on the influence of new operators. The second part of this article compares the methods of determining creditworthiness used by traditional banks and Fintechs, studying how the processes of applying for loans differ between the two types of institutions. In the final section, a sample of companies is evaluated to determine whether or not there are any differences between businesses that rely on traditional banks exclusively and businesses that rely on both traditional banks and Fintechs.