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A Guide to Different Types of Financial Technology

Over the past decade, fintech has exploded in growth thanks to several key trends like increased broadband and mobile internet access, cloud computing, and advancing capabilities in areas like data analytics and AI.

Fintech, a portmanteau of "financial technology," refers to the emerging financial services sector focused on using software and modern technology to improve and automate financial activities.

Today’s Insights

  • The rise of FinTech

  • Overview of some of the major types of fintechs transforming the world of finance:

  • Closing

Read Time: 5 minutes

The rise of FinTech

Over the past decade, fintech has exploded in growth thanks to several key trends like increased broadband and mobile internet access, cloud computing, and advancing capabilities in areas like data analytics and AI.

Venture capital investment in fintech startups has surged from around $3 billion in 2011 to over $50 billion invested globally in 2021. According to Yahoo Finance, the global fintech market is forecast to reach $882.30 billion by 2030, representing a 17% compound annual growth rate (CAGR) between 2023 and 2030. Per McKinsey research, fintech revenue could expand at a 15% annual pace between 2022 and 2028, triple the projected growth rate of traditional banking over this period.

As of 2023, there were over 30 different fintech company subsectors, spanning areas as diverse as banking, investment, insurance, cryptography and blockchain, personal finance, and more.

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overview of some of the major types of fintech’s transforming the world of finance:

Challenger Banks 

Challenger or neobanks are fintech’s building modern online-only banks without costly branch infrastructure. They attract customers with superior digital experiences, global mobility, and innovative features. Top players include Revolut, N26, Chime, and Varo.

Lending Fintech

Online lending fintech’s use algorithms and alternative data for faster loan approval. They include balanced payment installment lenders like Affirm, small business lenders like Fundbox, and quick personal loan providers like Tala.

Insurance Fintech

Insuretech startups are disrupting the insurance industry by automating processes and utilizing connected device data for usage-based insurance. Top insuretechs include Oscar Health, Metromile, Discovery and Absa Insurance.

Investing & Wealth 

Fintech’s Investing and wealth management fintech’s aim to make investing and wealth management advice more accessible. They include robo-advisors like Betterment and Stash, stock trading apps like Robinhood, and equity crowdfunding platforms like SeedInvest.

Cryptocurrency Fintech

Crypto fintech’s focus on buying, selling, storing, lending, and creating services around cryptocurrency. Major players include Coinbase, BlockFi, and Ripple.

Personal Finance 

Fintech’s These fintech apps allow users to efficiently manage their personal finances, often using techniques like auto-categorization of transactions and personalized tips. Top apps include Mint, Acorns, Digit, and Cleo.

Embedded Finance 

Embedded finance fintech’s provide the financial tools and services for non-finance brands to integrate financial capabilities seamlessly into their products. Providers like Bond, Railsbank and how can we forget Stripe power financial experiences from companies like Shopify, Revolut, and GoCardless.

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Closing

The fintech revolution continues to accelerate, as these startups uniquely address pain points across the entire financial services spectrum. In the next decade, the lines between traditional financial institutions and fintech disruptors will increasingly blur as they continue to merge, partner, and transform experiences together for their customers.

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