Fintech, which combines the words “financial” and “technology,” is a relatively new and somewhat ambiguous phrase that refers to any developing technology that enables consumers or financial institutions to supply financial services in a newer and faster way than previously possible. Consider the difference between walking into a bank to inquire about your balance and being able to access that information in real-time on your phone.
The evolution of financial services includes anything from a consumer’s capacity to viewing their financial activities online and allowing contactless payments to tools that help financial institutions to make quick lending decisions.
Type of Fintech services
Fintech in action also includes the capacity for investors to conduct their own research, select companies, and track the success of their portfolios in real-time. FinTech is empowering consumers to take control of their financial lives, resulting in far greater financial literacy than previously possible. By employing new technology, it is tearing down traditional silos and assisting people in improving their financial status and outcomes. Here’s a quick look at how the fintech service business is both disrupting and boosting some areas of the finance industry.
1. Credit and Digital Lending
Lending Club uses peer-to-peer lending to allow users to lend money to each other for business projects without the involvement of a traditional financial institution. The utilization of Big Data and advanced analytics across digital platforms has enabled each of these developments.
Examples of Key Fintechs in Credit and Digital Lending:
Credit Karma based in San Francisco from 2007 provides a service (free credit reports) in exchange for the opportunity to market loans and credit cards suited to the unique needs of its consumers in the burgeoning sector of credit reporting.
Kabbage, founded in 2008 based in Atlanta, provides loans and fundings directly to small businesses and consumers through an automated lending platform and uses transactional data to make lightning-fast lending choices.
Tala, based in Santa Monica offers digital financial services to help the traditionally underbanked borrow, save and grow their money. Their consumer credit app is the world’s most accessible, instantly underwriting and disbursing loans to people who have never had a formal credit history.
Petal, based in New York from 2016, analyses consumers’ banking history and transforms it into a Cash Score (an alternative measure of your creditworthiness based on income, savings, and spending history). To allow more people to be approved with better rates, even if they’ve never had credit before.
Earnest, based in San Francisco from 2013 uses its Precision Pricing tool to determine individualized customer loans by using personal data to formulate student, home, car, and medical loans that are based on an individual’s unique situation to match the user with a rate and term that works for them instead of a standard rate and term.
2. Mobile Banking
With the increased demand for digital banking among consumers, several financial institutions are adopting or expanding their mobile banking capabilities. On their platforms, most banks today have some form of mobile banking functionality such as e-banking.
Examples of Key Fintechs in Mobile Banking:
Chime, based in San Francisco founded in 2013, is a new one-of-a-kind mobile bank that offers no-fee and automatic savings accounts as well as early payday via direct deposit. With over one million opened accounts, Chime is reportedly one of the fastest-growing banks in the United States.
N26, founded in 2013 from Berlin based in the US, is an online bank account that allows users to manage their entire financial life from their phone. With a full European banking license, state-of-the-art technology and no branch network, N26 has redesigned banking for the 21st century.
Mx, founded in 2010 from Utah, is one of the fastest growing leading data platforms for banks, credit unions and fintechs. It enables its clients and partners to easily collect, enhance, analyze, present and act on financial data. Using MX platform and products, MX clients are able to understand their customers in real-time like never before, allowing them to be truly customer-centric, empowering them to grow faster and deliver an exceptional customer experience all while reducing costs.
Cash App, founded in 2013 based in New York, is a mobile payment service developed by Block, Inc. that allows users to transfer money to one another using a mobile phone app. It is a simple product with a single purpose to bring a better way to send, spend, invest, and save to our millions of monthly active users. The service is only available in the US and the UK.
Starling Bank, founded in 2014 is a digital challenger bank based in the United Kingdom, which focuses on current and business account products. Through the app and online banking platform, they are helping nearly 1 million customers for quicker, easier and better control of their money like never before.
3. Mobile Payments
If you ask someone under the age of 30 how they prefer to pay, they’ll almost certainly tell you that smartphone apps are the way to go. Peer-to-peer services like Venmo have emerged to replace traditional payment methods as we’ve evolved from a cash-based society to one that is increasingly digital. In reality, mobile point-of-sale transactions are expected to reach $43 trillion globally in 2021.
Examples of Key Fintechs in Mobile Payments:
Veem was founded in 2014 based in San Francisco is a smart online and fee-free option to send, receive, and reconcile business payments within the United States and Canada.
PayPal was founded in 1998 in California based on a convenient, easy to use, and ubiquitous payment platform, both for shopping online and paying friends too. It operates as an online payments system in the majority of countries that support online money transfers, and serves as an electronic alternative to traditional paper methods such as checks and money orders.
Zelle was founded in 2016, an Arizona based digital payment that may be the simplest way to send money to a person in the US. It works inside your bank app or website, so the money goes straight into the receiver’s account.
Adyen is a Dutch payment company that allows businesses to accept e-commerce, mobile, and point-of-sale payments founded in 2006. Their unique data ecosystem reveals opportunities where businesses can grow. With their machine learning technology, they also protect their customer’s identity. It is listed on the stock exchange Euronext.
Circle Pay was launched in 2013 based in Boston to help internet businesses accept payments and send payouts globally in one unified platform. Move digital money leveraging traditional payment rails or do business in a more global, scalable, and efficient way through blockchain infrastructure.
4. Blockchain & Cryptocurrency
Users buying or selling cryptocurrencies such as bitcoin have been able to connect through cryptocurrency exchanges. By storing provenance data on the blockchain, blockchain solutions have tried to prevent fraud.
Examples of Key Fintechs in Blockchain and CryptoCurrency:
eToro, founded in 2007, is an Israeli social trading and multi-asset brokerage company that focuses on providing financial and copy trading services such as forex and crypto. It has registered offices in Cyprus, the United Kingdom, the United States, and Australia. The app is fully compatible with both iOS and Android devices to have access to a huge number of markets.
Webull is one of the best apps to buy cryptocurrency with small stakes. Webull Financial LLC founded in 2017 based in New York offers an electronic trading platform, accessible via mobile app and desktop computer, for the commission-free trading of stocks, exchange-traded funds, options, margins, and cryptocurrencies.
Coinbase is one of the best apps to invest in cryptocurrency for beginners digital currency wallet and platform where merchants and consumers can transact with new digital currencies. Founded in 2012 remotely, it is a secure online platform for buying, selling, transferring, and storing cryptocurrency such as Bitcoin, Bitcoin Cash, Ethereum, Ethereum Classic and Litecoin.
Binance is one of the world’s leading blockchain and cryptocurrency infrastructure providers with a financial product suite that includes the largest digital asset exchange by volume. It is dedicated to increasing the freedom of money for users, and features various crypto products and offerings such as trading and finance, education, data and research, social good, investment and incubation.
Gemini has been based in New York since 2014 and is the best Cryptocurrency exchange and custodian app that allows customers to buy, sell, and store large digital assets. It regulates cryptocurrency exchange, wallet, and custodian that makes it simple and secure to buy bitcoin and other cryptocurrencies.
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FinTech’s success is owed in large part to the chance it provides small businesses to compete on an equal footing with traditional banks and financial institutions. It’s no longer about who’s the biggest, but who’s the fastest and most responsive at effectively meeting ever-changing consumer needs, thanks to FinTech. Furthermore, FinTech organizations’ solutions are no longer “one size fits all.” Instead, they provide tailored services that satisfy a specific financial need at far lower costs than traditional financial providers. The FinTech companies that flourish will be those that continue to innovate in delivering new answers to old problems as customers become more savvy and connected.