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The Digital Finance Cube

A visual representation of digital finance and fintech

I recently read a paper from the Journal of Business Economics which reviews the working research and literature in the field of digital finance and fintech. To review the research, the authors developed "the Digital Finance Cube," which applies three central dimensions to structure the field.

The Digital Finance Cube

The first dimension of the cube focuses on the Digital Finance business function. The second and third dimension underlie the business function: technologies enable the Digital Finance business function, whereas these business functions are performed by institutions in the area of digital finance.

The three dimensions are arranged orthogonal to each other so that each area inside the Cube can be described by certain properties of the three dimensions. All areas inside the Cube represent smaller sub-cubes that refer to a specific combination of one business function, a certain technology, and a specific type of institution. Not all sub-cubes need to be occupied. A number of sub-cubes is neither researched nor touched by practitioners of the financial industry. There are institutions that occupy only one sub-cube and other institutions which occupy a range of many sub-cubes. Two important features of this Cube are its high level of generalizability and flexibility. As a result, the dimensions can be extended by new elements once innovation yields new business functions or technologies.

Thinking about fintech and digital finance with respect to this cube enables a greater understanding of what fintech is, the innovations it offers, and the actors that offer more innovative and democratic solutions to consumers.

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