Innovation and Fintech

This chapter is dedicated to the research of financial innovations as well as the emergence and development of financial technology (Fintech). The history of innovation in the field of finance is as long as civilization itself. The processes of creating innovations were related to the development of the overall economic activity and social circumstances. In the last half-century, the scope and dynamism of financial innovations have significantly expanded and accelerated. New financial instruments have emerged, a number of trading strategies have been developed based on use of that instruments, technical and technological progress have led to a change in approach, processes, and even the paradigm of doing financial business and the functioning of the financial services industry. Financial technology understood as a combination of finance and technology is playing an increasing role in the functioning of modern financial institutions. Fintech has brought us accelerated digitalization in the financial service industry. This chapter points out its development, importance, and areas of application in light of the challenges facing the modern world of finance today. In order to more efficiently analyze certain aspects of the development of innovation and fintech, an analogy with the development of the industrial revolution (from 1.0. to 4.0.) was used. The world of modern finance has entered a completely new phase of development that is appropriate for the time in which we live—the era of the Industrial Revolution 4.0. These processes are unstoppable, so we can expect more changes and innovations in the future, perhaps with even greater dynamism and intensity.