Financial technology or fintech is an industry consisting of companies that use technology and innovation to compete with traditional financial organizations represented by banks and intermediaries in the financial services market. Currently, numerous technology startups as well as large established organizations that try to improve and optimize the financial services provided call themselves a part of fintech.
Fintech is also the industry where companies use new financial technologies and solutions to compete with traditional financial organizations for the hearts and means of customers. They use their fintech tools to improve their services and conquer the market.
For example, the Chinese WeChat is a suite of applications from Tencent Holding. This platform offers the “WeChat Payments” option. Its every 5th user (out of the overall 889 million monthly users) has his credit card linked to the platform and thus, has access to the Wallet, all commercial functions and trading accounts. This way, the users can pay for many offline and online goods and services with the help of their smartphone.
Previously, fintech was perceived solely in the context of internal development of financial organizations. Now, it is as close as possible to the consumer of financial services, because it underlies all online transactions - from money transfers to utility bills.
During several years of development of the fintech industry, now there are more than a dozen categories of fintech businesses:
Personal finance - mobile and desktop applications from startups that help manage finances, analyze costs, receive forecasts of future expenses in the form of detailed reports.
Payments are fintech tools that give access to basic financial services. Mobile Internet, smartphones and innovative approaches to financial transactions make it possible to provide access to financial payments even where there are no banking institutions.
Lending services imply the possibility of lending without the participation of banks. Startups operate on the basis of distributed registries and help lenders and borrowers from the consumer and business sectors cooperate favorably.
Money transfers - allow users to transfer money without the participation of banks. They use mobile platforms and simple authentication in their work. Here are some examples: Revolut, TransferWise, Klarna.
Investment platforms - also called Wealthtech. They include advisor robots, digital brokers, micro investment platforms and personal finance management programs. They work on automation and market accessibility for retail investors.
Security - companies in this area provide simpler and more reliable data processing for banks themselves: from customer authentication to measures of protection against fraudulent schemes.
B2B fintech - a direction designed to solve the problems of mutual settlements and data exchange in business. It implies smart contracts based on blockchain technologies.
Big Data Analysis - designed for advertising and PR agencies that have been using personal data in their activities for a long time, but needed a more systematic approach.
RegTech is one of the most useful areas for business. Allows to automatically adapt a business to changes in legislation and market conditions.
InsureTech - imply insurance offering automated products: mobile applications, payout automation, interaction in the field of the Internet.
Artificial intelligence - this area is still underdeveloped. Still, all financial companies try to reduce staff costs and invest into automated technologies.
Crowdfunding - creates platforms for collective financing, allows the creators of the product and investors to meet for further cooperation. The most popular are: Kickstarter and Indiegogo.
Neobanks are the solution in the field of banking services. They are, most often, created in the form of mobile applications that replace the services of classic banks (examples: Monobank, Rocketbank).
Cryptocurrencies are a type of digital currency that works without a central payment system, completely automated. It is mined using powerful computing systems. A lot of start-ups, exchanges and investment platforms are built on cryptocurrency investments, but financial experts cannot clearly see the future of this industry.
Blockchain is a technology of distributed data registries. Each participant in its chain has its own server, confirming the legitimacy of the operations of other users. The technology is marked by reliability, also being the base of the Bitcoin.
