The palgrave handbook of FinTech and blockchain

The rapid development of new technologies applied to the finance industry has coined the term Financial Technology (FinTech). Thereby, FinTech is multidisciplinary in its nature and significantly affects nearly every field of our society. Startups are continuously striving to find a compelling use case for distributed ledger technology. The fascination for FinTech and how it may revolutionize traditional databases of institutions is one reason why Maurizio Pompella and Roman Matousek edited the book The Palgrave Handbook of FinTech and Blockchain. The handbook is grouped into five parts and contains 22 research articles on FinTech, blockchain technology, cyber risk, and digital currencies. In total, 37 researchers have contributed to this book. Overall, the reader profits enormously from the author’s extensive knowledge and research experience.

The Palgrave Handbook of FinTech and Blockchain offers an ideal starting point for researchers and practitioners seeking in-depth information on FinTech, blockchain and digital currencies. Part 1 contains two chapters. Chapter 1 provides an overview of the handbook. In Chapter 2, Paul David Richard Griffiths describes the history of FinTech. The author emphasizes that banks overlooked the rapid technological breakthroughs due to regulatory changes following the Global Financial Crisis in 2007-2008.

Part 2 focuses on FinTech and blockchain technology from an international perspective and includes six articles. In Chapter 3, Rupesh Regmi and Zhuo Zhang investigate financial engineering and communication technology. Interestingly, this article describes the historical evolution of information and communication technology over the last three centuries. Chapter 4 argues that blockchain technology revolutionizes the financial landscape due to omitting financial intermediaries. Notably, the use cases of blockchain technology range beyond bitcoin. In short, blockchain technology has numerous advantages, including security, privacy, traceability, and original data provenance. Chapter 5 describes the opportunities and regulatory challenges of FinTech companies. Chapter 6 focuses on FinTech Unicorns. A unicorn is a privately held startup with a valuation above $1 billion. The authors show that 12.2% (7.8%) of the 255 investigated unicorns belong to the FinTech (Big data) industry. A case study of FinTech in India and Africa is provided in Chapter 7. Chapter 8 deals with which policy mix fosters digital transformation and financial inclusion in the Middle East, North Africa, Afghanistan, and Pakistan.

Part 3 investigates blockchain technology and cyber risks. Chapter 9, on alternative data in FinTech and business intelligence, is written by Lin William Cong, Beibei Li, and Qingquan Tony Zhang. This chapter introduces the reader to recent research utilizing unstructured data such as textual analysis, image processing, social media, and mobile data. The authors conclude that the general trend of using alternative data in academic research will continue. Chapter 10 focuses on the central mechanism, governance, and decentralization of bitcoin. The research focus in Chapter 11 is on digital structured products. Chapter 12 provides a nuanced categorization of crypto-tokens and discusses the role of tokens within a digital ecosystem. Overall, the authors define four categories of crypto-tokens. These categories include payment, platform, product, and security tokens. Chapter 13 argues that cyber resilience strengthens the stability of financial markets. Initial coin offerings and potential risks during the platform’s early development are described in Chapter 14. Chapter 15 investigates the risks of blockchain technology. The authors interviewed 80 individuals from 60 firms to identify these risks. In the next step, the authors develop a practical framework to improve the security decisions of firms.

The next part of the book deals with how blockchain technology affects traditional financial services. Chapter 16 assesses the impact of FinTech on the banking industry and financial intermediation. The currently observed financial disintermediation due to innovations in technology is discussed in chapter 17. Chapter 18 examines to what extent the COVID-19 pandemic affected FinTech. Chapter 19 describes digital currencies and payments. Specifically, the author investigates the mechanism and role of central bank digital currencies and provides insights into how China enforces its currency. Chapter 20 gives a broad overview of cryptocurrencies and other digital assets. The author describes the most prominent cryptocurrencies and the critical differences between them. Additionally, Andria van der Merwe compares the characteristics of cryptocurrencies with fiat money. The author describes the network value to transactions metric to detect cryptocurrency bubbles. Finally, stylized facts about cryptocurrencies are discussed. Chapter 21 investigates the effect of FinTech from a customer’s perspective. The author argues that FinTech can significantly improve customer experience and customer journey.

The final part of the book includes one article. Chapter 22: From Disruption to post-Pandemic Scenario is written by Maurizio Pompella and Lorenzo Constantino. Generally, the COVID-19 pandemic has affected multiple aspects of our society. However, the article exclusively focuses on how COVID-19 affected FinTech. The authors conclude that the COVID-19 pandemic deflated the blockchain and FinTech bubble.

The Palgrave Handbook of FinTech and Blockchain ties together research on FinTech and Blockchain from various perspectives, including 22 articles from 37 researchers. The authors combine their FinTech knowledge to make this highly interdisciplinary topic accessible to readers without prior knowledge. Importantly, the authors constantly provide a link to the current academic literature. Each article investigates FinTech from a different perspective. The handbook includes case studies, practical frameworks as well as academic research. Thus, the book is an excellent starting point due to its multifaceted content and moderately technical focus. The book presupposes no prior knowledge of FinTech, blockchain technology, and bitcoin. Therefore, the handbook is targeted toward interested readers and academics who want to delve deeper into the topic of FinTech. Since FinTech is a rapidly evolving field of research, this handbook provides an excellent overview of the current state. Overall, the authors offer valuable insights and demystify FinTech, blockchain technology and digital currencies

In summary, The Palgrave Handbook of FinTech and Blockchain is a must-have for market practitioners, scientific researchers, and experienced finance students interested in FinTech, blockchain technology and cryptocurrencies.

About the author: Luca Liebi is currently a Ph.D. candidate and research assistant at the School of Finance of the University of St.Gallen, Switzerland. His research interests are empirical asset pricing and risk management with a special focus on cryptoassets.