New frontiers in digital finance: An exploratory study on a sample of Italian FinTech companies

This study aims to investigate the nature and expected evolution of business models adopted by FinTech firms in Italy and to examine their economic and financial performance. The first part of the research offers a conceptual and historical overview of the FinTech ecosystem, including its defining technological foundations, sectoral classifications and evolving business models. The goal of the analysis is to highlight the main characteristics of FinTech firms and their development across segments such as Payments, Lending, InsurTech, WealthTech, RegTech, and Blockchain-based services. The second part develops an empirical analysis; in particular, it employs both a qualitative, descriptive analysis and a quantitative panel analysis of 15 Italian FinTech firms (2018-2024), exploring trends in profitability, operational activity, liquidity conditions, and financial structure. The findings reveal a marked deterioration in profitability after 2020, despite continued operational expansion, pointing to rising cost pressures and limited financial resilience. Clustering results show a polarized sector: only a few large-scale firms achieve strong profitability, most operate as small, low-risk, low-growth entities, and a minority experience persistent financial fragility. Performance ratios, liquidity management, and operational scale emerge as the strongest determinants of ROA and ROE. Overall, the study contributes to the literature by integrating qualitative insights with empirical financial evidence, offering a comprehensive assessment of the structural, regulatory, and economic forces shaping the sustainability of Italian FinTech firms. • This study aims to investigate the evolution of business models adopted by Italian FinTech firms and their economic and financial performance. • It integrates a conceptual overview of the FinTech ecosystem with a quantitative panel analysis of 15 Italian FinTech firms (2018-2024). • Results show a significant post-2020 decline in profitability despite continued operational expansion. • Cluster analysis reveals a polarized industry, with only a few large-scale firms achieving strong profitability, most operating as small, low-risk, low-growth entities, and a minority experiencing persistent financial fragility. • The work provides academics, policymakers, firms and financial institutions with qualitative insights complemented by empirical financial evidence.