Electron Markets (2018) 28:245–264

https://doi.org/10.1007/s12525-017-0275-0

RESEARCH PAPER

Understanding FinTech start-ups – a taxonomy

of consumer-oriented service offerings
Henner Gimpel 1 & Daniel Rau 1 & Maximilian Röglinger 1

Received: 17 November 2016 / Accepted: 18 October 2017 / Published online: 8 November 2017
# The Author(s) 2017. This article is an open access publication

Abstract The financial sector is facing radical transforma- Keywords Financial services . Financial technology .
tion. Leveraging digital technologies to offer innovative ser- FinTech . Business model . Services . Taxonomy
vices, FinTech start-ups are emerging in domains such as asset
management, lending, or insurance. Despite increasing invest-
ments, the FinTech phenomenon is low on theoretical insights. Introduction
So far, the offerings of FinTech start-ups have been predom-
inantly investigated from a functional perspective. As a func- The financial sector is facing radical transformation. FinTech
tional perspective does not suffice to fully understand the of- start-ups, an abbreviation for financial technology start-ups,
ferings of FinTech start-ups, we propose a taxonomy of non- revolutionize how customers experience financial services
functional characteristics. Thereby, we restrict our analysis to (Mackenzie 2015). Leveraging digital technologies, FinTech
consumer-oriented FinTech start-ups. Our taxonomy includes start-ups offer innovative financial services and boost devel-
15 dimensions structured along the perspectives interaction, opments in domains such as payment, wealth management, or
data, and monetization. We demonstrate the applicability of trading (Chuen and Teo 2015; Kim et al. 2016). For instance,
our taxonomy by classifying the offerings of 227 FinTech TransferWise offers international money transfer online and at
start-ups and by identifying archetypes via a cluster analysis. low cost. Wealthfront, another FinTech start-up, unleashes the
Our taxonomy contributes to the descriptive knowledge on potential of private wealth management to low-income
FinTech start-ups, enabling researchers and practitioners to individuals.
analyze the service offerings of FinTech start-up in a struc- Considering the previous development in electronic mar-
tured manner. kets, the FinTech phenomenon is a logical evolutionary step. It
was the Internet that enabled e-commerce in the 1990s,
followed by dynamic Web services, standardization, and the
JEL classification M13 . N2 . N7 . O3 integration of e-business technologies in enterprise applica-
tions. In recent years, the mobile channel, cloud-based ser-
vices, and big data analytics drove the transformational shift
Responsible Editor: Rainer Alt to consumerization, i.e., the offering of user-centered life so-
lutions in areas such as health, mobility, or finance (Alt and
* Daniel Rau
Zimmermann 2014). In today’s financial services sector,
daniel.rau@fim-rc.de
FinTech start-ups offer consumer-oriented banking, insurance,
Henner Gimpel and other financial services (Alt and Puschmann 2012). They
henner.gimpel@fim-rc.de are the key innovation driver with experts predicting a very
Maximilian Röglinger
promising future. In 2014, global investments in FinTech tri-
maximilian.roeglinger@fim-rc.de pled to more than USD 12 billion (Dietz et al. 2015), and in
2015, investments increased even further (Mead et al. 2016).
1
FIM Research Center, University of Augsburg, Offering innovative financial services as asset-light and
86135 Augsburg, Germany compliance-easy organizations, FinTech start-ups evolve into
246 H. Gimpel et al.

challenging competitors and strong allies of traditional finan- FinTech start-ups, we investigate the following research ques-
cial institutions (Chuen and Teo 2015). By 2020, FinTech tion: What are the non-functional characteristics of
start-ups are estimated to handle over 20% of the financial consumer-oriented FinTech start-up service offerings?
service business (Kashyap et al. 2016). Accordingly, tradition- To answer our research question, we propose a taxonomy
al financial institutions massively invest in the digitalization of that helps classify FinTech start-up service offerings. To do so,
their services. For instance, Germany’s largest bank an- we iterate the taxonomy development process of Nickerson
nounced to invest EUR 1 billion in digitalization until 2020 et al. (2013). Structured along the perspectives interaction,
(Deutsche Bank 2015), and the second largest Spanish bank data, and monetization, we derive 15 dimensions and related
has invested an annual average of around EUR 800 million characteristics from the literature and exemplary FinTech
since 2011 (BBVA 2015). Traditional institutions increasingly start-ups. We validated our taxonomy by classifying the offer-
aim to benefit from alliances with FinTech start-ups, setting up ings of 227 FinTech start-ups, identifying archetypes per per-
venture capital funds beyond USD 100 million (Dany et al. spective using hierarchical clustering, and examining relation-
2016). Due to these high investments and the central role of ships among these archetypes.
FinTech start-ups in the financial sector, it is worthwhile to Our taxonomy addresses two user groups: researchers,
strive for an in-depth understanding of the service offerings of who analyze FinTech start-ups and develop theories in this
FinTech start-ups. field, and practitioners, who design or evaluate FinTech
Despite the rising importance of FinTech start-ups, the start-ups and their offerings. Both groups can use our tax-
FinTech phenomenon is low on theoretical insights. Academic onomy for gaining a deeper understanding of the FinTech
insights are scarce and most related publications are commercial phenomenon, identifying core dimensions of FinTech
reports (Zavolokina et al. 2016). Today, we do not fully under- start-up service offerings, defining typical service charac-
stand how the service offerings of FinTech start-ups can be char- teristics based on our taxonomy, analyzing the market of
acterized, what they have in common, and how they differ. consumer-oriented FinTech start-ups, and identifying
FinTech services are usually classified from a functional perspec- comparable non-competitive services.
tive including domains such as account management, savings, or The remainder of this paper is structured as follows. First,
crowdfunding (Dany et al. 2016; Dietz et al. 2015; we provide background information about FinTech start-ups
Gulamhuseinwala et al. 2015). While the functional perspective and existing service taxonomies. Second, we outline our re-
helps group FinTech start-ups with respect to what they do for search method. Third, we present our taxonomy of FinTech
customers, it does not suffice to fully understand how FinTech start-up service offerings. Fourth, we apply our taxonomy to
start-ups configure their offerings. What is missing is a non- 227 real-life examples and identify archetypes via cluster anal-
functional view on the service offerings of FinTech start-ups that ysis. Fifth, we discuss the implications and limitations of our
abstracts from FinTech start-ups’ specific function for consumers work. We conclude with a brief summary and outline of future
(O’Sullivan et al. 2002). A non-functional classification of research opportunities.
FinTech services will help understand both the FinTech phenom-
enon and the role of FinTech start-ups in the financial sector.
Especially for consumer-oriented FinTech start-ups, we ex- Domain background
pect a large increase of knowledge. In particular, we are inter-
ested in the interaction between start-ups and individual con- FinTech and FinTech start-ups
sumers, as consumerization and the provision of customer-
centric life solutions are major trends in the electronic markets FinTech is the abbreviation of Bfinancial technology,^ which is
field (Alt and Puschmann 2012). Further, more information is a blend of Bfinancial services^ and Binformation technology^
publicly available about consumer-oriented FinTech start-ups. (Oxford English Dictionary n.d.). The term FinTech was first
Therefore, we focus on consumer-oriented FinTech start-ups, used in the early 1990s in the name of a project by Citigroup
excluding start-ups that primarily address businesses, focus on predecessor to foster technological collaboration (Hochstein
financial services providers’ internal processes, or facilitate 2015). Since 2014, it has gained attention in contexts such as
exchange between two or more financial service providers innovative business models (Google 2016). Despite low theo-
without consumer involvement. We focus on FinTech start- retical insights into the FinTech phenomenon, we draw from its
ups, as they represent the spearhead of innovation in the fi- few mentions in academic literature and perspectives from
nancial sector, while traditional institutions struggle to cope commercial publications to derive a working definition, veri-
with legacy systems and structures. Further, FinTech start-ups fied by observations made during our study.
are less understood and, thus, call for more intense research Academic and commercial literature characterizes FinTech
compared with FinTech-based services of traditional financial differently. Generally, FinTech is referred to as innovative and
institutions. As existing classification schemes for FinTech personalized financial services and products (Allen and Overy
and services do not cover the non-functional perspective of LLP 2015; Chuen and Teo 2015; Dany et al. 2016; Dapp 2014,
Understanding FinTech start-ups – A taxonomy of consumer-oriented service offerings 247

2015; Dietz et al. 2015; Gulamhuseinwala et al. 2015; Kim et al. quarters of the global FinTech investment was spent in the US,
2016). Whereas Drummer et al. (2016) as well as 10%–15% in Europe, and 5%–10% in Asia (Dietz et al. 2015).
Gulamhuseinwala et al. (2015) relate FinTech to business Because of low bureaucratic boundaries, deep understanding of
models, Kim et al. (2016) consider it an entire sector. customer needs, and dynamic teams with high technical skills,
Zavolokina et al. (2016) summarize that either new services, FinTech start-ups stand out with short development cycles and
products, processes, or business models emerge with FinTech. time-to-market. Though they follow a customer-centric strategy,
Dany et al. (2016) highlight customer centricity as a constitutive long-term success rates are not yet available and earnings remain
characteristic of FinTech services (Chuen and Teo 2015; uncertain. However, they are attractive to traditional financial
Gulamhuseinwala et al. 2015). All sources agree that FinTech institutions, which already invested in FinTech partnerships, ac-
leverages digital technologies such as the Internet, Internet of quisitions, and internal incubators to expand their service portfo-
Things, mobile computing, and social media (Allen and Overy lios to reach new customer segments and enrich customer expe-
LLP 2015; Chuen and Teo 2015; Dany et al. 2016; Dapp 2014, rience (Dany et al. 2016).
2015; Dietz et al. 2015; Drummer et al. 2016; Gulamhuseinwala
et al. 2015; Kim et al. 2016; Zavolokina et al. 2016). Many Service taxonomies
sources also mention the use of data analytics and artificial intel-
ligence (Allen and Overy LLP 2015; Dany et al. 2016; Dapp The term Btaxonomy^ is often used interchangeably with
2014, 2015). By leveraging emerging digital technologies, Bframework^ or Btypology^. Taxonomies help structure and or-
FinTech enables, innovates, and disrupts the financial services ganize knowledge, grouping objects from a distinct domain
market (Allen and Overy LLP 2015; Gulamhuseinwala et al. based on common characteristics and explaining the relation-
2015; Kim et al. 2016; Zavolokina et al. 2016). Zavolokina ships among these characteristics (Cook et al. 1999; Nickerson
et al. (2016) argue that, besides technology, FinTech is a devel- et al. 2013). Taxonomies are needed if little knowledge is avail-
opment within start-ups and established companies nurtured by able (Gregor 2006). As FinTech is an emerging phenomenon,
substantial monetary investments. Distilling the essence of the there is little guidance on the analysis of existing and the design
definitions above, we define FinTech and FinTech start-ups as of new FinTech start-up service offerings.
follows: In the literature, there are taxonomies that differentiate fi-
nancial services from other services (Guile and Quinn 1988),
FinTech characterizes the usage of digital technologies structure the role of technology in service provision
such as the Internet, mobile computing, and data analyt- (Fitzsimmons and Fitzsimmons 2008; Froehle and Roth
ics to enable, innovate, or disrupt financial services. 2004), and discuss non-functional service properties
FinTech start-ups are newly established businesses that (O’Sullivan et al. 2002). Though being insufficient to fully
offer financial services based on FinTech. understand the service offerings of FinTech start-ups, these
taxonomies are a good starting and reference point. Below,
Today, FinTech start-ups cover many consumer-facing el- we introduce service taxonomies relevant for our purposes
ements of the financial value chain. Table 1 overviews major (Fitzsimmons and Fitzsimmons 2008; Leimeister 2012;
groups of financial services and exemplary FinTech start-ups. Meffert and Bruhn 2009; Park et al. 2012.
Apparently, most FinTech start-ups address one particular fi- Guile and Quinn 1988 classify services based on their role
nancial service such as money transfer or trading. in an economy. Such roles are financial, government, or infra-
From an industry perspective, FinTech start-ups are typi- structure services. Accordingly, services are an integral rather
cally non-financial businesses such as technology-driven than a peripheral part of the economy (Fitzsimmons and
companies and online businesses (Dapp 2014, 2015; Fitzsimmons 2008). Froehle and Roth (2004) focus on the role
Gulamhuseinwala et al. 2015; Kim et al. 2016). Although of technology in service encounters, presenting five arche-
some start-ups hold a full banking license (e.g., N26), most types of technology-related customer contact. In the
do not. To offer services that require a full banking license or technology-free mode, the service encounter involves interac-
to leverage the regulatory and risk management experience of tions between customers and human service providers. In the
traditional financial institutions (The Economist Intelligence technology-assisted mode, only the service representative
Unit 2015), some FinTech start-ups, such as auxmoney, col- uses technology. The technology-facilitated mode allows cus-
laborate with traditional financial institutions (Dany et al. tomers and service representatives to use the same technology.
2016; Dapp 2015; Gulamhuseinwala et al. 2015) or newly There is no face-to-face contact in the technology-mediated
established Bwhite label^ banks such as solarisBank. mode via communication technology and the technology-
With multiple venture-capital investments in recent years, the generated mode where human service providers are entirely
FinTech start-up development rapidly accelerated globally, replaced by technology. Based on the triad of customers, con-
unfolding its full dynamics with tremendous growth (Dietz tact personnel, and service organization, Fitzsimmons and
et al. 2015; Gulamhuseinwala et al. 2015). In 2014, over three- Fitzsimmons (2008) differentiate services by the party that
248 H. Gimpel et al.

Table 1 Major functional domains of financial services and exemplary FinTech start-ups

Functional domain Justificatory references FinTech start-up examples

Account management Dietz et al. (2015), Drummer et al. (2016) Centralway Numbrs, N26
Asset management, investments, and savings Dany et al. (2016), Dietz et al. (2015), Drummer et al. (2016), Digit, Wealthfront
Gulamhuseinwala et al. (2015)
Crowdfunding / crowdinvesting Chuen and Teo (2015), Dany et al. (2016) Bergfürst, Funding Circle
Cryptocurrencies Chuen and Teo (2015), Dany et al. (2016) bitcoin.de, Xapo
Financial planning Dany et al. (2016) Betterment, LearnVest
Insurance Dany et al. (2016), Gulamhuseinwala et al. (2015) Coverfox, Friendsurance
Lending and financing Dany et al. (2016), Dietz et al. (2015), Drummer et al. (2016), Affirm, Avant
Gulamhuseinwala et al. (2015)
Payment and money transfer Chuen and Teo (2015), Dany et al. (2016), Dietz et al. (2015), goHenry, TransferWise
Drummer et al. (2016), Gulamhuseinwala et al. (2015)
Peer-to-peer lending Chuen and Teo (2015) auxmoney, Lending Club
Trading Dany et al. (2016) eToro, Robinhood
Others – BankingCheck, CreditKarma

dominates the service encounter. In service-organization- Fitzsimmons’ (2008) service taxonomy. The service taxono-
dominated encounters, service provision is highly standard- my of O’Sullivan et al. (2002) suggests dimensions that can be
ized, while personalization via contact personnel is limited incorporated in the development of our FinTech taxonomy.
or fully restricted. In contact-personnel-dominated encoun- Basically, FinTech start-up service offerings are accessible
ters, customers have little control as they are in a subordinate without temporal or spatial restrictions. Due to regulatory or
position. In customer-dominated encounters, either a high de- economic reasons, there may be national boundaries of service
gree of personalization and customization or full control over availability. Further, FinTech start-ups use digital channels
self-service fosters customer sovereignty. Finally, O’Sullivan and vary in their charging style, settlement, payment obliga-
et al. (2002) describe non-functional properties as character- tions, service quality, security and trust, and ownership and
izing services independent from their application domain or rights. The service taxonomy of O’Sullivan et al. (2002) as a
function to the customer. O’Sullivan et al. (2002) suggest whole is not sufficient to answer our research question as
distinguishing services by temporal and spatial availability, important dimensions such as personalization or use of data
channels used for customer-company interaction, charging are missing. As these taxonomies do not fully explain FinTech
styles used for monetization, settlement as mutual obligations start-up service offerings from a non-functional perspective,
of the service provider and requester, payment obligations we designed a new taxonomy that includes relevant dimen-
included in settlement contracts, service quality as difference sions from extant taxonomies.
between expected and actual service provision, security and
trust as foundational properties, and ownership and rights as-
sociated with service delivery. Research method
In line with the service taxonomy of Guile and Quinn
(1988), FinTech start-up service offerings can be classified In this study, we combine qualitative and quantitative research
as financial services. However, this taxonomy does not enable (Bryman 2006). In the qualitative part, we develop a taxono-
further differentiating financial services. Following the taxon- my of FinTech start-up service offerings. In the quantitative
omy of Froehle and Roth (2004), FinTech start-up service part, we apply our taxonomy to classify real-life examples and
offerings can feature all modes of technology in the service group them using cluster analysis. This section focuses on the
encounter except for the technology-free and -assisted modes. taxonomy development process. Details on the cluster analy-
Due to their use of digital technologies, most FinTech service sis can be found in the application section.
offerings are technology-mediated or -generated. Though not Figure 1 shows the iterative taxonomy development process
fully explaining the differences between FinTech start-up ser- as per Nickerson et al. (2013) that consists of seven steps. After
vice offerings, the ideas of Froehle and Roth (2004) can be the definition of a meta-characteristic, which serves as founda-
incorporated in the development of our taxonomy, shedding tion for all other characteristics of the taxonomy, objective and
light on the role of technology in the interaction between subjective ending conditions are defined. For each iteration of
FinTech start-up and consumer. In line with the main idea of steps 3 to 7, the empirical-to-conceptual (inductive; in case of
FinTech start-ups, most service offerings can be classified as sufficient real-world data) or conceptual-to-empirical approach
customer-dominated encounters of Fitzsimmons and (deductive; leveraging knowledge of the authors and from the
Understanding FinTech start-ups – A taxonomy of consumer-oriented service offerings 249

Fig. 1 Taxonomy development

process in information systems

literature) can be chosen. In an empirical-to-conceptual itera- (Baden-Fuller and Haefliger 2013; Clemons 2009; Skilton
tion, a sample of real-world objects is drawn from which com- 2015). This shift can also be observed in other industries. For
mon characteristics are derived and grouped into dimensions. example, Facebook offers its users a free social network, but
In conceptual-to-empirical iterations, characteristics and di- earns money by allowing companies to conduct target marketing
mensions are derived based on the authors’ knowledge and based on user data. During the taxonomy development process,
from the literature related to the meta-characteristic. These con- we checked if a major perspective is missing in our taxonomy.
ceptually derived characteristics and dimensions are then veri- However, all identified non-functional characteristics and dimen-
fied against real-world objects. The taxonomy is revised after sions could be matched to one of the three perspectives just
each iteration. The taxonomy development process iterates un- outlined. Thus, interaction, data, and monetization are essential
til the ending conditions are met. when systematizing the service offerings of consumer-oriented
We iterated the taxonomy development process as follows: FinTech start-ups. Our taxonomy does not claim to cover the
As for the meta-characteristic in step (1), we chose Bnon-func- entire business model of FinTech start-ups, as this would require
tional characteristics of consumer-oriented FinTech start-up ser- investigating other perspectives such as ownership structure,
vice offerings in the perspectives interaction, data, and funding, and employee structure. Instead, our taxonomy focuses
monetization^. Compared with traditional financial institutions, on non-functional properties of such service offerings.
FinTech start-ups do not have completely different service offer- As for the ending conditions in step (2), we chose Bat least
ings. However, differences can be observed in three areas. Due to one object is classified under every characteristic of every
the consumerization trend in the electronic markets field (Alt and dimension,^ Bno new dimensions or characteristics were
Zimmermann 2014) and in line with service-dominant logic that added in the last iteration,^ and Bno dimensions or character-
describes value co-creation as essential for services (Vargo and istics were merged or split in the last iteration^ from the list of
Lusch 2004), it is important to understand the interaction be- objective ending conditions proposed by Nickerson et al.
tween FinTech start-ups and customers (Setia et al. 2013). (2013). If the taxonomy is considered concise, robust, com-
Further, data processing has always been at the core of financial prehensive, extendible, and explanatory, we assumed subjec-
services. Nowadays, technology not only changes the interaction tive ending conditions to be met (Nickerson et al. 2013).
between service providers and customers, but also expands the In four iterations of steps (3) to (7), we used the conceptual-to-
role and possibilities of data analytics (Baesens et al. 2016). empirical (iteration 1) and empirical-to-conceptual (iterations 2 to
Finally, new monetization models emerge as users of financial 4) approach to derive a diverse set of characteristics and dimen-
services need not necessarily pay for services with money sions. In iteration 1, we examined the literature on existing service
250 H. Gimpel et al.

taxonomies, FinTech, customer-company interaction, data pro- non-functional dimensions and characteristics included in our
cessing, and monetization. We also incorporated our knowledge taxonomy structured along the perspectives interaction, data,
about the FinTech phenomenon gained through conferences, pre- and monetization. Table 2 also indicates whether the dimen-
sentations, newspaper articles, FinTech start-ups, and discussions sions are exclusive or non-exclusive and in which iteration the
with representatives of financial service providers (Nickerson dimensions were added or revised. As for exclusive dimen-
et al. 2013). On this foundation, we identified 24 characteristics sions, exactly one characteristic can be observed at a time,
along 11 dimensions (i.e. personalization, information exchange, such as either Bpersonalized^ or Bnot personalized^ in the
user network, role of IT, hybridization, channel strategy, data type, dimension Bpersonalization^. For non-exclusive dimensions,
payment schedule, user’s currency, partner’s currency, and busi- multiple characteristics can be observed in one service offer-
ness cooperation). In all other iterations, we chose the empirical- ing, such as Buser^ and Bpeer^ data in the dimension Bdata
to-conceptual approach and examined sample FinTech start-ups source^. To develop a future-looking taxonomy, we grounded
collected from four sources. To allow for replication, we searched the exclusiveness of the included dimensions on theoretical
publicly available FinTech start-up databases in the Internet that possibility instead of on currently observable real-life exam-
cover the FinTech market at an international scope and across ples. Below, we introduce the dimensions and non-functional
functional domains. In iteration 2, our source was characteristics in detail together with justificatory references.
Paymentandbanking.com (Bajorat 2015), an online blog observ- We show an application of our taxonomy in one of the fol-
ing the FinTech market with a focus on German-speaking coun- lowing sections.
tries since May 2011. We filtered Bajorat’s list for service offer-
ings of consumer-oriented FinTech start-ups and extracted 111 Interaction
(out of 198) real-life examples. Analyzing these real-life exam-
ples, we extended our taxonomy by 11 characteristics along 4 The first perspective refers to the interaction between FinTech
dimensions (i.e. interaction type, data source, time horizon, and start-ups and customer. It comprises seven dimensions, i.e.,
data usage). In iteration 3, we drew a random sample of 270 personalization, information exchange, interaction type, user
FinTech start-ups (among 878 internationally active companies network, role of IT, hybridization, and channel strategy.
labeled BFinTech^) from CrunchBase (2016), which claims to
be the primary source of company intelligence to millions of users & Personalization – Personalization describes the customi-
comprising hundreds of thousands of start-up entries. As some zation of content and content presentation. FinTech start-
start-ups focus on business-to-business (B2B) interactions or are ups can provide their users with the possibility to person-
no real FinTech start-ups, we filtered the sample for 88 consumer- alize services on their own (Wells and Wolfers 2000;
oriented FinTech start-ups, thereof 83 not considered in previous Zhang et al. 2005). If a service is personalized, it can be
sources. As a result, we revised the dimension Bdata usage^ from adapted to the individual needs of a particular user or user
two to three characteristics; that is, we split the characteristic group. Not personalized services are offered in a standard-
Banalytical^ into Bbasic analytical^ and Badvanced analytical.^ ized way without significant personalization.
In iteration 4, we extended our sample with two reports: the & Information exchange – Information exchange captures
BFinTech 50^ report by Forbes Magazine (Sharf 2015) that con- how interactions between a FinTech start-up and its users
tains 50 FinTech start-ups with focus on the US and the BFinTech are triggered (Ma 2015; Xu et al. 2010). Pull services
100^ report by KPMG and H2 Ventures (Toby and Pollari 2015) provide or exchange information only after the user has
that includes 50 leading and 50 emerging FinTech start-ups. Both accessed the service. Push services inform users regularly
lists contained 72 so far unconsidered consumer-oriented FinTech or based on events, e.g., with notifications on mobile de-
start-ups. In this iteration, we derived no additional characteristics, vices, emails, or text messages.
as the additional sample confirmed the existing characteristics and & Interaction type – The interaction type systematizes the role
dimensions of our taxonomy. Based on the mentioned sources, of FinTech start-ups in the interaction with their users (Chircu
we are convinced to have a large and cross-functional coverage of and Kauffman 1999). Direct interaction reflects one-on-one
the international FinTech market. After the fourth iteration, all service delivery from the FinTech start-up to the user. An
objective and subjective ending conditions were met and we intermediary is a service that brings together users with other
agreed on the final set of non-functional characteristics and businesses or with other users. A marketplace is a specific
dimensions. form of an intermediary that explicitly lists the offers of busi-
ness partners or other users that can be accepted by the users
of the FinTech start-up service offering.
Taxonomy of FinTech start-up service offerings & User network – The user network dimension mainly repre-
sents the extent to which a service offering enables commu-
We now present our taxonomy for service offerings of nication among users of the FinTech service (Lesser and
consumer-oriented FinTech start-ups. Table 2 overviews the Fontaine 2004). A user network is isolated, if no
Understanding FinTech start-ups – A taxonomy of consumer-oriented service offerings 251

Table 2 Taxonomy of the service offerings of consumer-oriented FinTech start-ups

Perspective Dimension Characteristics E/N1 It.2

Personalization not personalized personalized E 1
Information exchange pull push N 1
Interaction type Direct intermediary marketplace E 2
Interaction User network isolated interconnected E 1
Role of IT technology-mediated technology-generated E 1
Hybridization service-only with physical product E 1
Channel strategy digital exclusive digital non-exclusive E 1
Data source user peer public N 2
Time horizon historic current predictive N 2
Data advanced
Data usage transactional basic analytical N 2+3
analytical
Data type structured unstructured N 1
Payment schedule none transactional subscription N 1
User’s currency attention data money E 1
Monetization
Partner’s currency none money E 1
Business cooperation stand-alone ecosystem E 1
1
E = Exclusive dimension (one characteristic observable at a time); N = Non-exclusive dimension (potentially multiple characteristics observable at a
time) 2 Iteration in which the dimension was added or revised

communication is enabled between individual users. allow for using parts of the FinTech service without
Services with an interconnected user network facilitate the digital channels.
exchange among users through a user community or inter-
user contacts.
& Role of IT – Froehle and Roth (2004) differentiate five Data
archetypes of technology in service encounters. As we
consider technology-driven FinTech start-up services, on- The second perspective characterizes the processing of data by
ly face-to-screen contact is relevant to the interaction be- FinTech start-ups. This perspective comprises four dimen-
tween users and FinTech start-ups. In technology- sions, i.e., data source, time horizon, data usage, and data type.
mediated service encounters, users and service agents are
not co-located, but their interaction is carried out via tech- & Data source – The data source dimension differentiates
nology. Technology-generated means that no service service offerings of FinTech start-ups by the data sources
agent is directly involved. they use (Janssen et al. 2012; Linoff and Berry 2002).
& Hybridization – The hybridization dimension refers to the User data relates to personal, transactional, and behavioral
FinTech start-up’s possibility of offering bundles of physical data of individual users, whereas peer data refers to the
products and services that are called hybrid products data of other users or customers. Public data covers data
(Berkovich et al. 2009; Park et al. 2012). If the Fintech service that is not directly related to users or customers such as
is provided with a physical product, a physical product (e.g., a open data.
credit card required to handle transactions) is integrated in the & Time horizon – The time horizon of data involved in
core service offering. Service-only means that no physical FinTech services ranges from historic over current data to
thing is required for service delivery beyond a mere access future or predictive data (Armstrong 2002). Transaction his-
point to the Internet such as a smartphone or a Desktop PC. tories or historic stock trends are examples of historic data,
& Channel strategy – The channel through which a whereas user inputs and results of data processing represent
FinTech start-up offers its service is captured by the current data. Predictive data result from analyzing current
channel strategy dimension. All FinTech start-ups use and historic data with statistical techniques.
digital channels, but their services can also be delivered & Data usage – The data usage dimension distinguishes
in a multichannel way (O’Sullivan et al. 2002; Sousa whether FinTech start-up service offerings process data
and Voss 2006). Digital exclusive FinTech services re- transactionally or analytically (Bose 2009).
strict interactions to digital channels, e.g. an Internet Transactional data usage means that data are primarily
website or Mobile app. Digital non-exclusive services processed for a single transaction. We refer to basic
252 H. Gimpel et al.

analytical as the use of filters, aggregations, simple calcu- 2009). Business partners, such as advertisers or vendors
lations, comparisons, and techniques of similar analytical that benefit from user data or an attractive user base, can
intensity. Advanced analytical represents the use of more compensate the FinTech start-up with money. In case there
sophisticated methods such as prediction models, complex is no business partner involved in the core service offering
calculations, clustering, and comparable methods. that pays money to the FinTech start-up, the partner’s cur-
& Data type – The data type dimension reflects that FinTech rency is none.
start-up service offerings process data with different for- & Business cooperation – The business cooperation dimen-
mats and degrees of structure (Baars and Kemper 2008; sion indicates if a FinTech start-up operates on its own or
Weglarz 2004). Structured data correspond to data with if it collaborates with partners such as traditional financial
predetermined types and well-defined relationships (e.g. service providers (Bharadwaj et al. 2013; Iansiti and
normalized database schemas). Unstructured data, in con- Levien 2004; Lusch and Nambisan 2013; Moore 1996).
trast, comprise full-text documents without further seman- Stand-alone service offerings of FinTech start-ups do not
tics, images, videos, or audio files. maintain a business cooperation, whereas the co-creation
of value as one actor among interdependent other actors in
a business cooperation that sometimes even crosses tradi-
Monetization tional industry boundaries is described as ecosystem.

The third perspective describes how FinTech start-ups mone-

tize their service offering. It comprises four dimensions, i.e.,
payment schedule, user’s currency, partner’s currency, and Application of the taxonomy
business cooperation.
Classification of real-life examples
& Payment schedule – The payment schedule dimension
differentiates the regularity of payments from users or To demonstrate the applicability and usefulness of our taxon-
business partners. Alternatively, a service offering can be omy, we classified the service offerings of all 227 consumer-
free of charge (Fishburn and Odlyzko 1999; O’Sullivan oriented FinTech start-ups that we used to create the taxono-
et al. 2002; Postmus et al. 2009). With a transactional my. The definition of characteristics and dimensions from the
payment schedule, money is charged based on the actual preceding section served as a codebook for the classification.
usage of a FinTech service. In case of a subscription mod- To ensure quality, all authors discussed the classification of
el, a fixed fee is charged per unit time regardless of actual randomly drawn examples, extreme examples, and ambigu-
usage. If the service offering is free of charge, then the ous examples of service offerings and revised the codebook
payment schedule is classified as none. where necessary. Based on this common and codified under-
& User’s currency – In the FinTech context, users need not standing, the classification of the remaining cases was mainly
necessarily pay with money to use a service. For instance, performed by a single author. In an ex-post quality check, a
a FinTech start-up can implement a two-sided market and random 5% sample of our total set of start-ups was individu-
incorporate two value delivery systems with different pricing ally coded by each of the three authors and the results were
strategies. This results in valuable cross-side network effects compared. An inter-coder reliability of 87.3% as percent
for the two-side service provider. The user’s currency dimen- agreement or 73.3% as Fleiss’ (1971) kappa equally weighted
sion covers the currency with which the users pays for using among all dimensions suggests adequate data quality. Landis
a service (Baden-Fuller and Haefliger 2013; Eisenmann et al. and Koch (1977) denote a Fleiss’ (1971) kappa between 61%
2006; Rysman 2009). FinTech start-ups can monetize their and 80% as Bsubstantial^ strength of agreement among all
services by offering users’ attention to business partners such coders. Thus, we proceed with the analysis based on the cod-
as advertisers or to other fee-based services within and with- ing. Table 3 shows the relative frequency of all characteristics.
out the start-up. If the user’s currency is data, then the service Referring to the relative frequencies of non-functional char-
monetizes user data within or without the FinTech start-up. acteristics among real-life examples shown in Table 3, we had
However, the service can also be monetized by letting users to deal with publicly unavailable information that resulted in
pay with their money. missing values (14% missing for Buser’s currency,^ 15% for
& Partner’s currency –FinTech start-ups partnering with an- Bpartner’s currency,^ 19% for Bpayment schedule,^ and 1
other business can monetize their services by offering the missing value (1%) in each of the dimensions Binformation
attention or data of its users to this business partner. The exchange,^ Buser network,^ Bdata source,^ and Btime horizon
partner’s currency dimension represents if and how a busi- of data^). Due to these missing values, which we do not con-
ness partner pays to the FinTech start-up (Baden-Fuller sider for further interpretation, fractions of the characteristics
and Haefliger 2013; Eisenmann et al. 2006; Rysman in the affected dimensions can be even higher than observed.
Understanding FinTech start-ups – A taxonomy of consumer-oriented service offerings 253

When analyzing the statistics from Table 3, some notable dimensions. With the application of cluster analysis below,
observations can be made: Over one third (39%) of all investi- we take an aggregated perspective on the non-functional char-
gated FinTech start-ups personalize their service offerings to acteristics included in our taxonomy and infer high-level
serve their users individually. In line with Amazon’s CEO Jeff insights.
Bezos’ aim to build an individual online shop for each customer
(Walker 1998), those FinTech start-ups strive for individual cus-
tomer experience. Further, it is noteworthy that 76% of all con- Clusters of FinTech start-up service offerings
sidered service offerings were technology-generated; that is, no
human employee is directly involved in service delivery of more Methodological considerations
than three quarters of all investigated FinTech start-ups. As for
channel strategy, almost all (99%) FinTech start-ups exclusively To identify archetypes among the collected real-life examples
use digital channels. An example for a FinTech start-up that also of FinTech start-up service offerings, we applied cluster analy-
uses non-digital channels is MK Payment Solutions. You can sis. Cluster analysis is a statistical technique to group similar
redeem their prepaid vouchers purchased in a physical shop dur- objects based on their characteristics (Field 2013; Hair et al.
ing offline shopping without needing to redeem them online. 2010). The aim of this technique is to achieve high homogene-
However, the offline channel is just a supplement to online re- ity within each cluster and high heterogeneity among objects of
demption. Despite the availability of big data, smart data, and different clusters (Bacher et al. 2010; Backhaus et al. 2011;
advanced analytics, we were surprised that less than one third of Cormack 1971). We chose Ward’s (1963) algorithm, which is
all analyzed FinTech start-ups apply basic (21%) or advanced an agglomerative hierarchical clustering approach often used in
(9%) analytics. While all FinTech start-ups use current data, only practical applications (Backhaus et al. 2011; Ferreira and
8% use predictive data. Finally, it is not surprising that the ma- Hitchcock 2009; Fraley and Raftery 2002; Milligan 1980;
jority (93%) of FinTech start-ups process user data, but it is Milligan and Cooper 1988; Saraçli et al. 2013). Whereas
meaningful that they process mostly structured data (97%), with partitioning clustering algorithms start with a given number
unstructured data representing only 3% of all cases. In almost of clusters and proceed by mapping all objects to clusters until
half (43%) of all cases, the user pays for the service with money. a given function reaches its optimum, hierarchical clustering
Nevertheless, in one third (33%) of all cases, FinTech start-ups algorithms generate solutions for all possible numbers of clus-
monetize their service offerings through third-party companies ters by subsequently merging (agglomerative type) or dividing
instead of or additional to forcing users to pay for the service. (divisive type) clusters (Backhaus et al. 2011).
In sum, the service offerings of today’s FinTech start-ups Among the distance measures suitable for binary variables,
have very diverse configuration across our taxonomy’s 15 we selected the matching coefficient (Sokal and Michener

Table 3 Relative frequencies of the non-functional characteristics among the service offerings of 227 consumer-oriented FinTech start-ups

Perspective Dimension Characteristics

Personalization not personalized (61%) personalized (39%)
Information exchange pull (99%) push (22%)
Interaction type direct (28%) intermediary (54%) marketplace (18%)
Interaction User network isolated (78%) interconnected (21%)
Role of IT technology-mediated (24%) technology-generated (76%)
Hybridization service-only (89%) with physical product (11%)
Channel strategy digital exclusive (99%) digital non-exclusive (1%)
Data source user (93%) peer (26%) public (51%)
Time horizon historic (64%) current (100%) predictive (8%)
Data transactional basic analytical advanced
Data usage
(87%) (21%) analytical (9%)
Data type structured (97%) unstructured (3%)
Payment schedule none (11%) transactional (44%) subscription (29%)
User’s currency attention (35%) data (8%) money (43%)
Monetization
Partner’s currency none (52%) money (33%)
Business cooperation stand-alone (85%) ecosystem (15%)
Cumulated relative frequencies can be different from 100% if a dimension is non-exclusive or in case of missing data
254 H. Gimpel et al.

1958) rather than more complex measures like the Russel/Rao contingency tables, we derive p-values via Monte Carlo sim-
index (Rao 1948) or the Jaccard coefficient (P. H. A. Sneath ulation (Hope 1968). When the test indicates stochastic de-
1957) as it is the most straightforward approach, fits the sub- pendence between two perspectives (p-value ≤0.1), the map-
stantive interpretation of our data, is commonly used in com- ping of a FinTech start-up service offering to an archetype in
bination with Ward’s method and has shown to perform sim- one perspective relates to an archetype in another perspective.
ilar to other measures of distance or similarity (Finch 2005; Hence, there are typical combinations of archetypes. When
Hands and Everitt 1987). To apply the distance measure, we the test indicates stochastic independence between two per-
dichotomized our classification that each characteristic of a spectives, there are no statistically significant relationships
dimension is represented by a separate column that indicates between the archetypes in both perspectives.
1 if the characteristic is observable at the respective service
offering and 0 if not. Subsequently, we standardized all Cluster solution and interpretation
dimensions in a way that the distance between two service
offerings lays between 0 and 1 for each dimension. We The results of the cluster analysis are three archetypes in the
follow methodological guidelines like, for example, Finch interaction perspective, three in the monetization perspective,
(2005) who performed a simulation study and tested the ap- and two in the data perspective. For the cluster solution of the
plication of Ward’s algorithms in combination with different interaction perspective, goodness-of-fit measures state a total
distance measures, thereunder the matching coefficient, on sum-of-squares of 682.0 (error sum-of-square of 369.4 and R2
dichotomous data. Finch (2005, p. 97) asserts with respect to of 0.46). For the data perspective the total sum-of-squares is
the combination of dichotomous data, matching coefficient, 118.3 (error sum-of-squares of 93.9 and R2 of 0.21) and for the
and Ward’s method that B[...] results would support the notion monetization perspective the total sum-of squares is 405.4 (error
that cluster analysis of dichotomous data using these ap- sum-of-squares of 139.4 and R2 of 0.66). According to these
proaches is appropriate, and can be expected to work reason- goodness-of-fit measures, the archetypes of the data perspective
ably well.^ have the lowest R2 and are therefore less significant compared to
Despite tremendous research in the fields of cluster validation the higher R2 of the interaction and monetization archetypes. For
and measures for determining the suitable number of clusters, each archetype, Table 4 states absolute and relative frequencies of
there are no clear recommendations for one best suitable measure the characteristics among 227 real-life examples.
(Wu 2012). For instance, Backhaus et al. (2011), Milligan and The interaction perspective comprises three archetypes:
Cooper (1985), and Sneath and Sokal (1973) describe the deci- Bpersonalized isolated,^ Bnon-personalized isolated,^ and
sion between different cluster solutions (i.e., number of clusters) Bsocially connecting intermediate.^ All archetypes contain
as a trade-off between the manageability of the cluster solution FinTech start-ups mainly featuring pull-based information ex-
and homogeneity within each cluster. To determine a suitable change. In particular, personalized user interaction (100%) and
number of clusters, we considered 13 different measures as listed a not interconnected user base (91.4%) predominantly describe
in the Appendix (Tables 6 and 7). According to these measures, the personalized isolated archetype. In comparison, the non-
the number of clusters ranges from 1 to 14. As no clear number personalized isolated archetype mainly differs by very rare per-
of clusters is perceptible, we grouped all dimensions according to sonalization (3.4%). The socially connecting intermediate inter-
the perspectives interaction, data, or monetization and repeated action archetype is characterized by an interconnected user net-
the cluster analysis for each perspective separately. To ensure work (94.7%) and push-based information exchange (55.3%).
manageability, we limited the number of clusters to the number The data perspective comprises two archetypes: Bstandard
of dimensions for each perspective and considered the interpret- processing^ and Badvanced analytics.^ Both archetypes mainly
ability of the suggested cluster solutions when deciding the num- use structured data from users, but only 5.6% to 27.3% use peer
ber of clusters. We used a three-cluster solution for interaction data and around 50% to 60% publicly available data. The stan-
and monetization and the two-cluster solution for data. Table 4 dard processing archetype contains most FinTech start-ups from
presents the archetypes as cluster solutions for each perspective our sample. They typically use current data (99.5%) in a trans-
as well as the absolute and relative frequency of characteristics in actional way (93.8%) together with basic analytical functions
each archetype. (23.0%). With a size of 18 start-ups, the advanced analytics ar-
Finally, we created contingency tables (Table 5) across the chetype encompasses FinTech start-ups whose service offerings
perspective-specific archetypes, in which we used Pearson’s include advanced analytical data processing (100.0%).
chi-squared test of independence to examine dependencies The monetization perspective comprises three archetypes:
among all possible combinations of the three perspectives Bno money,^ Buser-paid,^ and Bbusiness-paid.^ It suffers from
(Agresti 2007). Partially considering comparatively small some missing values due to little available pricing information
cluster sizes with only 18 or 38 observations (e.g., the ad- for some FinTech start-up services. However, the no money
vanced analytics data archetype), we use a significance level archetype typically involves no paying business partner, and
of 0.1. For precision of the tests and given the cell sizes of the users only pay with their attention and loyalty or their data but
Understanding FinTech start-ups – A taxonomy of consumer-oriented service offerings 255

Table 4 Archetypes of 227 real-life consumer-oriented FinTech start-up service offerings

Interaction
Archetype Dimension Characteristics
Personalization not personalized [0] (0.0%) personalized [70] (100.0%)
Information exchange pull [68] (97.1%) push [19] (27.1%)
Personalized Interaction type direct [33] (47.1%) intermediary [31] (44.3%) marketplace [6] (8.6%)
isolated User network isolated [64] (91.4%) interconnected [5] (7.1%)
(n=70) Role of IT technology-mediated [12] (17.1%) technology-generated [58] (82.9%)
Hybridization service-only [68] (97.1%) with physical product [2] (2.9%)
Channel strategy digital exclusive [70] (100.0%) digital non-exclusive [0] (0.0%)
Personalization not personalized [115] (96.6%) personalized [4] (3.4%)
Information exchange pull [119] (100.0%) push [11] (9.2%)
Non- Interaction type direct [27] (22.7%) intermediary [57] (47.9%) marketplace [35] (29.4%)
personalized
User network isolated [112] (94.1%) interconnected [7] (5.9%)
isolated
(n=119) Role of IT technology-mediated [29] (24.4%) technology-generated [90] (75.6%)
Hybridization service-only [101] (84.9%) with physical product [18] (15.1%)
Channel strategy digital exclusive [117] (98.3%) digital non-exclusive [2] (1.7%)
Personalization not personalized [24] (63.2%) personalized [14] (36.8%)
Information exchange pull [38] (100.0%) push [21] (55.3%)
Socially Interaction type direct [3] (7.9%) intermediary [35] (92.1%) marketplace [0] (0.0%)
connecting
User network isolated [2] (5.3%) interconnected [36] (94.7%)
intermediate
(n=38) Role of IT technology-mediated [13] (34.2%) technology-generated [25] (65.8%)
Hybridization service-only [33] (86.8%) with physical product [5] (13.2%)
Channel strategy digital exclusive [38] (100.0%) digital non-exclusive [0] (0.0%)
Data
Archetype Dimension Characteristics
Data source user [202] (96.7%) peer [57] (27.3%) public [104] (49.8%)
Standard Time horizon historic [130] (62.2%) current [208] (99.5%) predictive [14] (6.7%)
processing transactional basic analytical advanced analytical
(n=209) Data usage
[196] (93.8%) [48] (23.0%) [3] (1.4%)
Data type structured [209] (100.0%) unstructured [24] (11.5%)
Data source user [10] (55.6%) peer [1] (5.6%) public [11] (61.1%)
Advanced Time horizon historic [15] (83.3%) current [18] (100.0%) predictive [4] (22.2%)
analytics transactional basic analytical advanced analytical
(n=18) Data usage
[2] (11.1%) [0] (0.0%) [18] (100.0%)
Data type structured [18] (100.0%) unstructured [3] (16.7%)
Monetization
Archetype Dimension Characteristics
Payment schedule none [24] (51.1%) transactional [0] (0.0%) subscription [0] (0.0%)
No money User’s currency attention [18] (38.3%) data [6] (12.8%) money [0] (0.0%)
(n=47) Partner’s currency none [24] (51.1%) money [0] (0.0%)
Business cooperation stand-alone [47] (100.0%) ecosystem [0] (0.0%)
Payment schedule none [0] (0.0%) transactional [49] (50.0%) subscription [52] (53.1%)
User-paid User’s currency attention [0] (0.0%) data [0] (0.0%) money [98] (100.0%)
(n=98) Partner’s currency none [93] (94.9%) money [3] (3.1%)
Business cooperation stand-alone [88] (89.9%) ecosystem [10] (10.2%)
Payment schedule none [2] (2.4%) transactional [50] (61.0%) subscription [13] (15.9%)
Business- User’s currency attention [62] (75.6%) data [13] (15.9%) money [0] (0.0%)
paid
(n=82) Partner’s currency none [1] (1.2%) money [71] (86.6%)
Business cooperation stand-alone [59] (72.0%) ecosystem [23] (28.0%)
[…] = Absolute frequency; (…) = Relative frequency; Cumulated relative frequencies can be different from 100% if a dimension is non-exclusive or in
case of missing data
256 H. Gimpel et al.

Table 5 Contingency tables and Pearson’s chi-squared test of independence among the archetypes of all three perspectives (n = 227 for each sub-table)

Contingency table for perspectives data and interaction

Interaction Pearson’s chi-squared

Personalized isolated Non-personalized isolated Socially test of independence
connecting intermediate
Data Standard processing 61 110 38 χ2 = 5.623
Advanced analytics 9 9 0 p-value = 0.053

Contingency table for perspectives monetization and interaction

Interaction Pearson’s chi-squared
Personalized isolated Non-personalized isolated Socially connecting intermediate test of independence
Monetization No money 17 17 13 χ2 = 8.781
User-paid 27 55 16 p-value = 0.058
Business-paid 26 47 9

Contingency table for perspectives data and monetization

Monetization Pearson’s chi-squared
No money User-paid Business-paid test of independence
Data Standard processing 42 89 78 χ = 1.730
2

Advanced analytics 5 9 4 p-value = 0.451

not (yet) with real money. FinTech start-ups of this archetype The test results further suggest dependence between the ar-
offer their service stand-alone (100.0%); that is, they are not chetypes of the monetization and interaction perspectives (p-
organized in a business ecosystem. The user-paid archetype value 0.058). The socially connecting intermediate interaction
involves no paying business partner (94.9%), but the user pays archetype occurs comparatively less with the business-paid
with money for the service delivery (100.0%), either in a monetization archetype (23.7% compared with 37.1% and
transactional way or within a subscription. Further, only a 39.5%, respectively, for personalized and non-personalized iso-
limited number of FinTech start-ups of this archetype are or- lated interaction archetypes).
ganized in a business ecosystem (10.2%). FinTech start-ups of Archetypes of the data and monetization perspectives seem to
the business-paid archetype are sometimes organized in a be independent (p-value 0.451). This means that the observed
business ecosystem (28.0%) but are mostly stand-alone archetype of a FinTech start-up service offering in the data per-
(72.0%). It involves a paying business partner (86.6%) and spective is independent from that in the monetization perspective.
demands attention (75.6%) or data (15.9%) from users only. The advanced analytics data archetype contains only a few ob-
In conclusion, the archetypes of the interaction perspective servations overall, but the distribution across monetization arche-
mainly distinguish FinTech start-up service offerings by the types follows the same pattern as for the standard processing data
degree of personalization and interconnectedness of the user archetype. Summarized, typical combinations of archetypes
network. Summarizing the archetypes of the data perspective, among the three perspectives interaction, data, and monetization
FinTech start-up service offerings mainly differ by the use of exist, however, not between every pair.
sophisticated data analytics methods that are currently ob-
served only to a small extent. Interpreting the archetypes of
the monetization perspective, FinTech start-up service offer- Discussion
ings can mainly be distinguished by the role (none, user, or
business partner) that pays for the service delivery. Our study contributes to the descriptive knowledge on the
Table 5 shows contingency tables among the arche- FinTech phenomenon, as it explores a not yet well-understood
types of all pairs of perspectives. The chi-squared test domain. Our main contribution is a theoretically well-founded
of independence indicates that archetypes of the data and empirically validated taxonomy that focuses on the non-
and interaction perspectives depend on each other an- functional characteristics of consumer-oriented FinTech start-up
other (p-value 0.053). The socially connecting interme- service offerings. The comprehensive view of our taxonomy
diate interaction archetype is not observed with the ad- complements existing functionally oriented FinTech classifica-
vanced analytics data archetype, although this setting tions. Although functional classifications help distinguish
occurs for the personalized and non-personalized isolat- FinTech start-ups based on what they do for customers, they
ed interaction archetypes (12.9% and 7.6% of the obser- abstract from the mechanics underlying FinTech start-up service
vations, respectively). offerings and from how service offerings can be configured. Our
Understanding FinTech start-ups – A taxonomy of consumer-oriented service offerings 257

taxonomy is the first to take a non-functional perspective. From a the roles of users and customers diverge as alternative ways
theoretical point of view, our taxonomy serves as foundation for of monetization emerge (i.e., a business-paid monetization
the analysis, design, and configuration of FinTech start-up ser- scheme where the user’s data is monetized).
vice offerings, the analysis of antecedents of FinTech success,
and the adoption of service offerings. Further, archetypes in each
of the three perspectives interaction, data, and monetization rep- Conclusion and further research
resent reoccurring patterns in the variety of service offerings.
Those archetypes can be used as a starting point to understand Against the increasing importance of FinTech start-ups for the
higher-order configurations of FinTech start-up service offerings financial sector, we investigated non-functional characteristics
and to anticipate comparable trends in other consumer-oriented of consumer-oriented FinTech start-up service offerings. To
industries. do so, we developed a taxonomy, following an established
As with every research project, our study is beset with limi- taxonomy development process. Contributing to the descrip-
tations. First, our sample of FinTech start-ups is not exhaustive, tive knowledge on FinTech start-ups, our taxonomy charac-
as there are over 12,000 FinTech companies worldwide offering terizes FinTech start-up service offerings based on 15 dimen-
traditional and new services (Dietz et al. 2015). We tried to ad- sions structured along the perspectives interaction, data, and
dress this issue by referring to different FinTech reports and monetization. By applying our taxonomy to 227 real-world
drawing a random sample from the extensive start-up database examples, we demonstrated that it helps analyze and under-
CrunchBase. Second, our samples sample only includes extant stand FinTech start-up service offerings. For each perspective,
FinTech start-ups, but the start-up landscape is highly dynamic. we also identified archetypes, i.e., typical combinations of
Emerging types of FinTech services may be underrepresented in characteristics across all included dimensions.
the current sample. For example, we assume that business eco- Our results also motivate future research. First, researchers
systems and the use of advanced data analytics will be observed should further explore the configuration of FinTech start-up
more often in the future. Therefore, we developed our taxonomy service offerings. Second, the relationships between different
to be revisable and extendible by new perspectives, characteris- configurations and the success of FinTech start-ups should be
tics, and dimensions, as suggested by Nickerson et al. (2013). examined. Third, researchers should investigate the service
Third, our taxonomy only considers consumer-oriented FinTech offerings of B2B FinTech start-ups as we only focused on
start-ups. To understand the FinTech phenomenon at large, B2B consumer-oriented start-ups. Our taxonomy could serve as a
FinTech start-ups and FinTech services offered by incumbents starting point as we expect similar dimensions in the data and
should be considered as well. interaction perspectives, while anticipating modifications in
Despite these limitations, our study entails a range of man- the monetization perspective. We hypothesize that the data-
agerial implications. First, our taxonomy provides practi- oriented archetypes can also be observed in the B2B segment.
tioners with a differentiated view on the configuration of Although the interaction-related archetypes are likely to have
FinTech start-up service offerings beyond a functional or tech- B2B equivalents as well, we think that the personalization
nological perspective. Practitioners such as traditional finan- dimension should be interpreted as individualization for each
cial service providers get a detailed understanding of the in- business partner. We expect most differences in the monetiza-
teraction among FinTech start-ups and their customers, learn tion perspective where the split between users’ and business
how FinTech start-ups employ data analytics to enable inno- partners’ currency may merge into a single dimension. We
vative financial services, and get to know different ways of also suggest to re-interpret the Bbusiness cooperation^ dimen-
monetizing a FinTech service. On this foundation, practi- sion by differentiating ecosystems into an asymmetric and
tioners can analyze an individual FinTech start-up service of- symmetric cooperation model. Asymmetric cooperation refers
fering, design new service configurations, and compare to relationships with dedicated service provider and requester
existing competitive and non-competitive service offerings roles, whereas symmetric cooperation relates to a strong focus
within and across functional domains. As for our cluster anal- on value co-creation by two or more business partners. We
ysis, we identified archetypes that capture reoccurring config- encourage researchers to evaluate a sample of FinTech start-
urations of service offerings. We identified Bpersonalized ups from the B2B segment and test our hypotheses. As tradi-
isolated,^ Bnon-personalized isolated,^ and Bsocially tional financial institutions begin to engage in partnerships
connecting intermediate^ as interaction-related archetypes, with FinTech start-ups and derive best-practices for offering
Bstandard processing^ and Badvanced analytics^ within the FinTech services on their own, an investigation of the service
data perspective, and Bno money,^ Buser-paid,^ and offerings of traditional financial institutions can be interesting
Bbusiness-paid^ as monetization-related archetypes. These ar- as well. Last not least, we suggest reassessing the dimensions
chetypes provide practitioners with an aggregated view on of our taxonomy and clustering results after a certain amount
FinTech start-up service offerings. Lastly, we addressed the of time, because this will provide valuable longitudinal in-
consumer’s role in FinTech services when we showed that sights into the evolution of the FinTech phenomenon.
258 H. Gimpel et al.

Appendix

FinTech start-up sample

Table 6 FinTech start-up sample with name, website URL, and source for each start-up

ID FinTech start-up Source

Name Website Bajorat (2015) CrunchBase (2016) Sharf (2015) Toby and Pollari (2015)

1 Achieve Lending achievelending.com x

2 Acorns acorns.com x x x
3 Affirm affirm.com x x x
4 appsichern appsichern.de x
5 Arthena arthena.com x
6 Atom Bank atombank.co.uk x x
7 auxmoney auxmoney.com x
8 Avant avant.com x x x
9 avuba avuba.de x
10 ayondo ayondo.com x x
11 Azimo azimo.com x x
12 BankingCheck bankingcheck.de x
13 Bankless24 bankless24.de x
14 barpay ezv-gmbh.de/produkte.html x
15 Barzahlen barzahlen.de x
16 BATS Global Markets batstrading.com x
17 Bergfürst de.bergfuerst.com x
18 Betterment betterment.com x x
19 bettervest bettervest.de x
20 Billpay billpay.de x
21 bitbit bitbit.cash x
22 Bitbond bitbond.com x
23 bitcoin.de bitcoin.de x
24 Bitt bitt.com x
25 Börsenampel boersenampel.com x
26 Bridg bridgtheapp.com x
27 buybitcoin buybitcoin.ph x
28 Call Levels call-levels.com x
29 cashboard cashboard.de x
30 cashcloud cashcloud.com x
31 Centralway Numbrs centralway.com x
32 Circle circle.com x
33 Circleup circleup.com x x
34 Coinbase coinbase.com x
35 CoinJar coinjar.com x
36 colleqt colleqt.com x
37 communitylife communitylife.de x
38 companisto companisto.com x
39 Coverfox Insurance coverfox.com x x
40 Credit Karma creditkarma.com x x x
41 CreditMantri creditmantri.com x
42 Cringle cringle.net x
43 crowdhouse crowdhouse.ch x
44 cybits cybits.de x
45 damantis damantis.com x
46 dban mydban.de x
47 Digit digit.co x
48 Doctor Wealth drwealth.com x
49 Earnest earnest.com x
50 easyfolio easyfolio.de x
51 elefunds elefunds.de x
52 elopay elopay.com x
53 Equitise equitise.com x
54 EstateGuru estateguru.eu x
55 Estimize estimize.com x x
Understanding FinTech start-ups – A taxonomy of consumer-oriented service offerings 259

Table 6 (continued)

ID FinTech start-up Source

Name Website Bajorat (2015) CrunchBase (2016) Sharf (2015) Toby and Pollari (2015)

56 eToro etoro.com x x
57 fairr fairr.de x
58 feelix myfeelix.de x
59 Fentury fentury.com x
60 Ferratum ferratumgroup.com x
61 Fidor Bank fidor.de x
62 FinanceFox financefox.de x
63 Financelt financeit.io x
64 finanzcheck finanzcheck.de x
65 finanzen.de finanzen.de x
66 Finmar finmar.com x
67 flatex flatex.de x
68 FormFree formfree.com x
69 Friendsurance friendsurance.de x x
70 Funding Circle fundingcircle.com x
71 Fundrise fundrise.com x x
72 getsafe getsafe.de x
73 ginmon ginmon.de x
74 go4q go4q.mobi x
75 goHenry gohenry.co.uk x
76 Goji goji.com x
77 greenXmoney greenxmoney.de x
78 helping cents helpingcents.info x
79 HiFX hifx.co.uk x
80 HITbills hitbills.com x
81 HolyTransaction holytransaction.com x
82 IDnow idnow.de x
83 idvos identitiy.tm x
84 Income& incomeand.com x
85 Innovative Student Loan Solutions isloansolutions.com x
86 Instavest goinstavest.com x
87 Investing.com investing.com x
88 iPayst ipayst.com x
89 itBit itbit.com x
90 Itemize Corp. itemize.com x
91 iZettle izettle.com x
92 justETF justetf.com x
93 Justspent justspent.com x
94 Kapitall kapitall.com x
95 Kard getkard.com x
96 Kesh kesh.de x
97 kittysplit kittysplit.com x
98 Klarna klarna.com x
99 klimpr klimpr.com x
100 Klinche klinche.com x
101 Knip knip.ch x x x
102 Kontoalarm kontoalarm.de x
103 Kontopilot (AppStore only) x
104 Laterpay laterpay.net x
105 LearnVest learnvest.com x x
106 lendico lendico.de x
107 Lending Club lendingclub.com x x
108 LendInvest lendinvest.com x
109 LendKey Technologies lendkey.com x
110 Lendstar lendstar.io x
111 Level Money levelmoney.com x x
112 liveident liveident.com x
113 Loanbase loanbase.com x
114 m8 (AppStore only) x
115 mamooble mamooble.com x
116 minnits minnits.de x
117 MK Payment Solutions mkpayment.com x
118 ModernLend modernlend.com x
260 H. Gimpel et al.

Table 6 (continued)

ID FinTech start-up Source

Name Website Bajorat (2015) CrunchBase (2016) Sharf (2015) Toby and Pollari (2015)

119 Money.net money.net x

120 moneygarden moneygarden.de x
121 Moneymeets moneymeets.com x
122 Motif Investing motifinvesting.com x x
123 myiban myiban.de x
124 MyMicroInvest mymicroinvest.com x
125 N26 n26.com x x x
126 Nelnet nelnet.com x
127 Neyber neyber.co.uk x
128 Nutmeg nutmeg.com x
129 onlineversicherung.de onlineversicherung.de x
130 opentabs opentabs.de x
131 OptionsHouse optionshouse.com x
132 organize.me organize.me x
133 Oscar hioscar.com x
134 Osper osper.com x x
135 owlhub. owlhub.co x
136 paij paij.com x
137 passt24 passt24.de x
138 Patientco patientco.com x
139 paycash paycash.eu x
140 payfriendz payfriendz.com x
141 paylax paylax.de x
142 Payoff payoff.com x
143 payorshare payorshare.de x
144 PayRange payrange.com x
145 paywithatweet paywithatweet.com x
146 payza payza.com x
147 Personal Capital personalcapital.com x x x
148 Piggipo piggipo.com x
149 PolicyBazaar policybazaar.com x x
150 Pom letspom.be x
151 prepaidbitcoin.ph prepaidbitcoin.ph x
152 PrimaHealth Credit primahealthcredit.com x
153 Propel joinpropel.com x
154 Property Partner propertypartner.co x
155 Prosper prosper.com x x x
156 qnips qnips.com x
157 Qontis qontis.ch x
158 qooqo qooqo.com x
159 quandoo quandoo.de x
160 Quirion quirion.de x
161 Qvivr swypcard.com x
162 RateElert rateelert.com x
163 ratepay ratepay.com x
164 Razorpay razorpay.com x
165 rebit rebit.ph x
166 Remitly remitly.com x
167 Rent My Items rentmyitems.com x
168 Revolut revolut.com x
169 Robinhood robinhood.com x x
170 RupeeTimes rupeetimes.com x
171 SatoshiPay satoshipay.io x
172 Savedo savedo.de x x
173 schutzklick schutzklick.de x
174 seedmatch seedmatch.de x
175 Self Lender selflender.com x
176 ShapeShift shapeshift.io x
177 sharewise sharewise.com x
178 Simple simple.com x
179 Simply Wall St simplywall.st x
180 smartdepot smartdepot.de x
181 smava smava.de x
Understanding FinTech start-ups – A taxonomy of consumer-oriented service offerings 261

Table 6 (continued)

ID FinTech start-up Source

Name Website Bajorat (2015) CrunchBase (2016) Sharf (2015) Toby and Pollari (2015)

182 SocietyOne societyone.com.au x x

183 Sofi sofi.com x
184 Splittable splittable.co x
185 SprinkleBit sprinklebit.com x
186 Squirrel squirrel.me x
187 sqwallet sqwallet.de x
188 Stockpile stockpile.com x
189 Stockspot stockspot.com.au x
190 StockTouch stocktouch.com x
191 Swanest swanest.com x
192 tabbt tabbt.com x
193 tipranks tipranks.com x
194 Traity traity.com x
195 TransferWise transferwise.com x x x
196 treefin treefin.com x
197 truewealth truewealth.ch x
198 Tullius Walden tullius-walden.com x
199 Twindepot twindepot.de x
200 twingle twingle.de x
201 United Signals united-signals.com x
202 vaamo vaamo.de x
203 Vaamo Finanz AG blog.vaamo.de x
204 Valuation App valuationapp.info x
205 vaulted vaulted.com x
206 Vertragium vertragium.de x
207 vexcash vexcash.com x
208 vitrade vitrade.de x
209 voola voola.de x
210 Vouch vouch.com x
211 Wealthfront wealthfront.com x x x
212 webid webid-solutions.de x
213 WeLend welend.hk x
214 weltsparen weltsparen.de x
215 wikifolio.com wikifolio.com x
216 WiseBanyan wisebanyan.com x
217 Worldremit worldremit.com x
218 Xapo xapo.com x
219 xpresscredit xpresscredit.de x
220 Yacuna yacuna.com x
221 yapital yapital.com x
222 Yoyo Wallet yoyowallet.com x
223 ZahlZ.app zahlz.com x
224 Zencap zencap.de x
225 Zinsland zinsland.de x
226 zinspilot zinspilot.de x
227 Zopa zopa.com x
262 H. Gimpel et al.

Measures to decide on cluster solution

Table 7 Suggested number of clusters of 227 real-life examples of

FinTech start-up service offerings (without split into the interaction, data,
and monetization perspectives)

Measure suggested by Suggested number

of clusters

Ball and Hall (1965) 3

Caliński and Harabasz (1974) 3
Davies and Bouldin (1979) 14
Dunn (1974) 8
Frey and Van Groenewoud (1972) 1
Halkidi et al. (2000) 11
Hartigan (1975) 3
Hubert and Levin (1976) 14
Krzanowski and Lai (1988) 14
McClain and Rao (1975) 2
Milligan (1980, 1981) 8
Rousseeuw (1987) 12
Tibshirani et al. (2001) 2

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