1. Introduction

Fintech (financial technologies) represent the integration between finance and technology, revolutionizing banking, insurance and financial services. The adoption of digital solutions allows startups and traditional institutions to offer more accessible, fast and low-cost services.

2. Fintech Classification

Fintechs are divided into different operating segments, including:

• Payment services: include the execution of transactions via bank transfers, direct debits, payment cards and electronic transfers, often supported by authorized institutions or innovative digital platforms.

• Lending platforms: digital structures that connect direct those who offer and those who request financing, reducing intermediation costs compared to traditional institutions.

• Insurtech: application of digital technologies to the insurance sector, including underwriting automation, claims management and use of big data for risk profiling.

• Robo-advisor: automated financial consultancy systems that, through algorithms, propose personalized investment strategies with reduced costs compared to consultants traditional.

• Cryptofinance: the set of financial services provided through blockchain technologies and digital assets such as cryptocurrencies and tokens, including exchanges, wallets, lending and DeFi (decentralized finance).

3. Technological Innovation

Key technologies include:

• Artificial Intelligence (AI): Application of intelligent systems to improve risk management, fraud detection, automated financial advice and user behavior analysis.
  
• Big Data & Analytics: collection and analysis of large amounts of data to personalize services, assess credit risk and optimize business processes.

• Blockchain: distributed and immutable ledger used to ensure security, transparency and traceability in operations such as payments, smart contracts and identity validation.

• Open banking (PSD2): regulatory paradigm that allows authorized third parties to access customers’ bank accounts to offer services integrated, promoting competition and innovation in the financial sector.

4. Advantages and Risks of Fintech

✅ Advantages

• Financial inclusion
  Fintech technologies help break down barriers to access to financial services, allowing even non-banked individuals, in rural or economically disadvantaged contexts, to access payment, credit and savings services through mobile devices and internet connections. This promotes broader economic participation and a reduction in the financial gap.
  
• Reduction of costs
  Thanks to automation, the elimination of intermediaries and the efficiency of digital processes, fintechs are able to offer services at significantly lower costs than traditional channels. This advantage translates into lower commissions for customers and greater competitiveness in the sector.
  
• Traceability
  Digital solutions, especially those based on blockchain and distributed ledger technologies, ensure a high level of transparency and traceability of transactions. This facilitates control and reporting, also facilitating compliance with regulatory obligations and the fight against illicit activities.

⚠️ Risks

• Cybersecurity
  Digital interconnection exposes fintechs to cyber threats such as data breaches, malware and ransomware attacks. The protection of sensitive data and IT infrastructure is a fundamental requirement, but often difficult to guarantee for startups with limited resources.
  
• Money Laundering
  The anonymity and speed of some technologies (for example in crypto services) can favor the improper use of systems for money laundering and illicit financing. This requires the adoption of stringent AML/CFT policies (anti-money laundering and counter-terrorism financing).
  
• Reputational risk
  Operational errors, scams or technical malfunctions can compromise user trust and damage the public image of a fintech. Unlike traditional banks, fintechs often do not have consolidated reputational crisis management systems.

5. Impacts on the Traditional Sector

• Banking disintermediation
  Fintechs reduce the traditional role of banks as intermediaries, offering financial services directly to end customers via apps or online platforms. This reduces dependence on traditional banking circuits and calls into question their traditional business model.
  
• Collaborations between banks and fintechs
  More and more banking institutions are choosing to collaborate with fintechs to integrate advanced technologies into their systems. Partnerships allow banks to innovate rapidly, acquire technological know-how and expand the range of services offered, while maintaining regulatory and fiduciary control.
  
• Pressure on margins
  The efficiency of fintechs and increased competition lead to a reduction in revenues per unit of service for traditional operators. Banks must adapt to an environment where customers are less willing to pay for non-digitalized or low-value added services.

6. Future Outlook

• Adoption of hybrid models
  There is an increasing integration between fintech and traditional banking models, where banks will adopt fintech technologies to improve their operational efficiency and offer more personalized user experiences. This will lead to a fusion between traditional reliability and digital innovation.
  
• Expansion of embedded finance
  Financial services will increasingly be embedded in non-financial platforms (e.g. e-commerce, mobility, social media), offering loans, insurance or accounts directly within familiar digital environments for the user. This makes services more accessible and reduces friction in the user experience.
  
• Harmonised regulation
  Regulatory developments aim to establish consistent rules at international and European level to ensure system stability and consumer protection. Initiatives such as the MiCA Regulation and the Digital Operational Resilience Act (DORA) in the EU are concrete examples of this harmonization process.

7. Payment Services in San Marino (Reg. BCSM n. 2020-04)

• Type: transfers, direct debits, cards, wallets, AIS, PIS
• Authorized entities: banks, IPs, IMELs, TPPs
• Requirements: minimum capital, structure, governance
• Security: strong authentication, segregation of funds
• Supervision: BCSM, authorization regime and sanctioning

8. Conclusions

The integration of technology and finance poses regulatory challenges but is also one of the main drivers of economic transformation at a global level. Fintechs are reshaping access to credit, payments, investments and risk management, with potentially positive effects on inclusion, innovation and competitiveness.

In the context of the Republic of San Marino, the introduction of a regulation for payments and the recent regulations on tokens and crypto-assets – strengthens the capacity of the San Marino financial system to attract innovative operators and international investments.

The creation of a clear and proportionate regulatory framework, the activation of regulatory sandboxes and the promotion of public-private partnerships are fundamental tools to support a dynamic and safe fintech ecosystem. In this perspective, San Marino presents itself as a competitive and regulated hub, ready to seize the opportunities of the digital and financial economy of the future in a context favorable to fintech development.