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Innovation in the financial industry: fintech and venture capital

Author

Listed:
  • Antonia Manzini

    (Bank of Italy)

  • Diego Scalise

    (Bank of Italy)

Abstract

Technological innovation has profoundly transformed financial services. This paper examines the diffusion of technology-intensive firms operating in the financial sector (fintech) and the pivotal role of venture capital in supporting their development. The analysis reveals an ecosystem predominantly consisting of small fintech firms, which cluster in the financial centres of countries with more developed capital markets. These locations are home, in particular, to business-to-business (B2B) firms, which frequently develop digital solutions for financial institutions. In this environment, incumbent financial intermediaries become the natural acquirers of the most promising fintech start-ups, integrating their technologies and capabilities into their value chains. Access to diversified sources of finance is a key determinant of these firms' growth. Venture capital acts as a catalyst by fostering strategic partnerships and facilitating the integration of innovative technologies, thereby contributing to the transformation of traditional financial intermediation. The distribution of fintech firms and the evolution of their financing cycle portray a sector undergoing a transition from an initial phase of rapid expansion to one of gradual consolidation.

Suggested Citation

  • Antonia Manzini & Diego Scalise, 2026. "Innovation in the financial industry: fintech and venture capital," Questioni di Economia e Finanza (Occasional Papers) 1055, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:opques:qef_1055_26
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    File URL: https://www.bancaditalia.it/pubblicazioni/qef/2026-1055/QEF_1055_26_EN.pdf?language_id=1
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    Keywords

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    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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