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FinTech Valuation

In: Startup Valuation

Author

Listed:
  • Roberto Moro-Visconti

    (Catholic University of the Sacred Heart)

Abstract

Financial technology (FinTech) is an industry composed of diversified companies that use technology to make financial services more efficient. FinTech is recognized as one of the most critical innovations in the financial industry and is evolving at a rapid speed, driven in part by the sharing economy, favorable regulation, and information technology. FinTech promises to disrupt and reshape the financial industry by cutting costs, improving the quality of financial services, and creating a more diverse and stable financial landscape. With the advances in e-finance and mobile technologies for financial firms, FinTech innovation emerged after the worldwide financial crisis in 2008 by combining e-finance, Internet technologies, social networking services, social media, artificial intelligence, and big data analytics. The valuation of FinTech companies concerns promising startups and some seasoned firms. FinTechs have a hybrid business model, as they operate in the financial (banking) sector deploying their technological attitudes. Evaluators may so 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, and the business model of FinTechs. The appraisal methodology may conveniently start from a strategic interpretation of the business model to extract the key evaluation parameters to insert in the model. Evaluation patterns typically follow Discounted Cash Flows (DCF) or other metrics based on market comparables.

Suggested Citation

  • Roberto Moro-Visconti, 2021. "FinTech Valuation," Springer Books, in: Startup Valuation, chapter 0, pages 245-279, Springer.
    • Handle: RePEc:spr:sprchp:978-3-030-71608-0_10
    DOI: 10.1007/978-3-030-71608-0_10
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    Cited by:

    1. Ruihui Pu & Deimante Teresiene & Ina Pieczulis & Jie Kong & Xiao-Guang Yue, 2021. "The Interaction between Banking Sector and Financial Technology Companies: Qualitative Assessment—A Case of Lithuania," Risks, MDPI, vol. 9(1), pages 1-22, January.

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