To abbreviate “financial technology,” we use the acronym “fintech.” Because of the breadth of the term, it is common for various forms of financial technology to existing nowadays. However, if you do any online banking or shopping, you have already interacted with fintech.
These are the cutting-edge tools or types of fintechs developed to facilitate the globalisation of financial services. Everything from computer programmes to mobile and web applications to cloud services to online elaborations of traditional banking to entire businesses are all included.
Different Types of Fintech
1. Digital Banking
The old banking systems need to change to fit the new times. Even the most traditional banks have begun their digital transformation in response to the wide range of applications of fintech available. Most of these financial institutions have already implemented web and mobile banking applications to broaden their service and meet the evolving needs of their customers.
These fintech solutions are focused on financial services. Customers embraced online payment methods immediately, elevating them to the status of the universal standard and preferred payment method. The rise of online retail makes this trend predictable. The percentage of retail sales generated through online channels is projected to rise to 22% by the year 2023.
3. Cryptocurrency and trading
The stock exchange has evolved as a result of fintech. Cryptocurrencies are gaining traction due to the emergence of novel fintech services. As a result of advancements in financial technology, users now have easy access to cryptocurrency markets and can easily send and receive cryptocurrency payments. The Blockchain system is the backbone of the cryptocurrency market. It protects cryptocurrency transactions and makes tampering with data extremely difficult.
The various forms of fintech have also democratised the trading industry, allowing anyone with an Internet connection to test their mettle in the market. Formerly, only specialists were allowed to do that. The result will be more money being put into stock markets worldwide.
4. Insurance and Insurance Technology
The insurance industry has been affected by the use of fintech solutions. The most significant reason is that policyholders have come to expect a simple and speedy method of getting in touch with their insurance provider. They are also interested in comparing insurance quotes from multiple companies without leaving the house. Insurance can now be tailored to the needs of each customer thanks to advancements in fintech.
5. Deposits and Loans
Deposit and lending services cater to individuals by helping them get loans and organise their savings. It’s a branch of the financial technology industry that allows people, with their own money, to budget and manage their investments.
Microloan platforms and “buy now, pay later” systems that let customers pay for their purchases throughout four instalments are products of the deposit and lending fintech that has emerged in recent years. Simple taps on a mobile device will get the job done. By bypassing conventional banks, customers can access credit scores and peer-to-peer loans through alternative lending platforms.
6. Raising Capital
When discussing the various forms of fintech, it is impossible to avoid discussing the development of novel approaches to financing. Fintech facilitates non-bank sources of funding. Numerous fintech services have made it possible for even the smallest businesses to attract investors.
Through capital raising, customers can access investments and capital raising opportunities in exchange for equity or interest rates. Crowdfunding has become the most well-known alternative funding option.
They are built on top of online services in response to the need of today’s consumers for simple, convenient, and digital money fintech applications. Different subsets of fintech can be identified by the specific financial needs they address. Payment gateways and other online payment solutions are among the most widely used.
Crowdfunding, a game-changing method of funding initiatives and goods, was made possible by advances in financial technology. The various types of fintechs have made managing our financial resources from our mobile devices an integral part of our daily lives.
Also, read: Fintech 101: A Beginner’s Guide