What Is Fintech? Financial Technology Definition (2024)

What Is Fintech? Financial Technology Definition (1)

Though the fintech industry conjures up images of emerging startups and disruptive technology, traditional banks and financial institutions are in the game now too, adopting fintech services for their own purposes. Here’s a quick look at some examples of how the industry is enhancing and evolving some areas of finance.

Types of Fintech Companies

Types of Fintech Startups and Companies

Mobile Banking and Neobanks

Mobile banking is the central focus of many finance technology companies. In the world of personal finance, consumers have increasingly demanded easy access to their bank accounts, especially on a mobile device. Most major banks now offer some kind of mobile banking feature, especially with the rise of digital-first banks, or neobanks. Neobanks are essentially banks without any physical branch locations, serving customers with checking, savings, payment services and loans on completely mobile and digital infrastructure. Some banks also allow third-party software applications to access a user’s financial information, which is called open banking. Some examples of fintech banks or neobanks are Chime, Current, Aspiration and Varo.

Cryptocurrency Fintech

Cryptocurrency and blockchain intersect with fintech in a number of ways. For starters, several crypto trading platforms have emerged in recent years that allow users to trade different kinds of cryptocurrencies and take advantage of decentralized exchanges. And to keep people’s digital currency safe, a number of crypto wallets have sprung up as well. In addition, several fintech companies use blockchain technology for payment processing, money transfer and secure digital identity management. Some examples of cryptocurrency fintech companies include Coinbase, Blockfi and SALT.

Fintech Investment and Savings

Fintech has caused an explosion in the number of investing and savings apps in recent years. More than ever, the barriers to investing are being broken down by companies like Robinhood, Stash and Acorns. While these apps differ in approach, each uses a combination of savings and automated small-dollar investing methods, such as instant round-up deposits on purchases, to introduce consumers to the markets.

Machine Learning and Trading

Being able to predict where markets are headed is the Holy Grail of finance. With billions of dollars to be made, it’s no surprise that machine learning has played an increasingly important role in fintech — and in trading specifically. The power of this AI subset in finance lies in its ability to run massive amounts of data through algorithms designed to spot trends and risks, allowing consumers, companies, banks and additional organizations to have a more informed understanding of investment and purchasing risks earlier on in the process.

Payment Fintech

Moving money around is something fintech is very good at. The phrase “I’ll Venmo you” or “I’ll CashApp you” is now a replacement for “I’ll pay you later.” These are, of course, go-to mobile payment platforms. Payment companies have changed the way we all do business. It’s easier than ever to send money digitally anywhere in the world. In addition to Venmo and Cash App, popular payment companies include Zelle, Paypal, Stripe and Square.

Fintech Lending

Fintech is also overhauling credit by streamlining risk assessment, speeding up approval processes and making access easier. Billions of people around the world can now apply for a loan on their mobile devices, and new data points and risk modeling capabilities are expanding credit to underserved populations. Additionally, consumers can request credit reports multiple times a year without dinging their score, making the entire backend of the lending world more transparent for everyone. Within the fintech lending space, some companies worth noting include Tala, Petal and Credit Karma.

Insurtech — Insurance Fintech

While insurtech is quickly becoming its own industry, it still falls under the umbrella of fintech. Insurance is a somewhat slow adopter of technology, and many fintech startups are partnering with traditional insurance companies to help automate processes and expand coverage. From mobile car insurance to wearables for health insurance, the industry is staring down tons of innovation. Some insurtech companies to keep an eye on include Lemonade, Kin and Insurify.

Fintech Trends

Fintech is not a new industry, it’s just one that has evolved very quickly. Technology has, to some degree, always been part of the financial world — whether it’s the introduction of credit cards or ATMs, electronic trading floors, personal finance apps and high-frequency trading in the decades that followed.

Over the past decade, though, the fintech industry has seen accelerated growth — and fintech innovations are likely to only advance from here.

Some fintech trends to keep an eye on include:

Digital Wallets

Digital wallets, like Apple Pay and Google Pay, allows people to store their payment information in a mobile app, and then use that app when it comes time to pay for something. While digital wallets have been around for years, their usage is still on the rise.

Blockchain in Fintech

Blockchain — a public ledger capable of recording the ownership, origin and movement of digital assets — will continue to impact the financial industry. For starters, the ledger technology and proliferation of smart contracts will greatly help with making the industry more secure and efficient.

Embedded Finance

Embedded finance is the term for when a non-financial business integrates fintech tools into its point of service. Examples include payment processing terminals at coffee shops and buy-now-pay-later buttons on e-commerce store checkouts. This integrated finance stack makes for a smoother, more-flexible experience for customers — and we’re likely to see it more and more in the days ahead.

Serving Traditionally Underserved Populations

The overarching promise of fintech is that technology makes it easier to provide financial services to people who historically have had little or no access to them. Indeed, several fintech companies aim to eliminate long-standing barriers so that people — typically younger people and people of color — can more easily save, invest and build wealth for themselves.

What Is Fintech? Financial Technology Definition (2024)


What is the meaning of fintech technology? ›

Financial technology (better known as fintech) is used to describe new technology that seeks to improve and automate the delivery and use of financial services. ​​​At its core, fintech is utilized to help companies, business owners, and consumers better manage their financial operations, processes, and lives.

What is fintech best described as? ›

FinTech is a specialized type of financial technology that uses cutting-edge innovations in applications, services, and processes to expand, enhance, automate, and scale the delivery of financial products and services.

What is the importance of financial technology fintech? ›

Most importantly, it helps in managing resources efficiently and find effective ways to utilize financial accounting information. Fintech is a boon for banks and other financial institutions that are often required to maintain high operational efficiency across multiple industries.

What is fintech quizlet? ›

FinTech is Financial Technology. Specifically, it is the implementation of new technology to financial solutions for both individuals and firms.

How does fintech make money? ›

Fintech companies are making money by using technology to offer financial services to consumers and businesses. They are able to offer these services at a lower cost than traditional financial institutions and are also able to reach a wider audience through the use of technology.

What are the types of fintech? ›

What are the FinTech Types?
  • Blockchain and Cryptocurrency. ...
  • Insurance (InsurTech) ...
  • Regulatory (RegTech) ...
  • Payments (PayTech) ...
  • Trading (TradeTech) ...
  • Digital Banking. ...
  • Personal Finance Management (PFM)

Which of the following is considered as fintech examples? ›

10 Examples of Fintech Solutions
  • Mobile Banking. Fintech is booming as mobile banking continues to grow. ...
  • Mobile Payment. Another good example of fintech services is mobile payment. ...
  • Crowdfunding Platform. ...
  • Insurtech. ...
  • Regtech.

What is the difference between finance and fintech? ›

Fintech companies often use data and analytics, artificial intelligence, and other digital tools to provide financial services in a more efficient and user-friendly way. Finance, on the other hand, refers to the management of money and other assets.

Who is the biggest fintech company? ›

Visa Paytech

What is fintech in financial services? ›

The word “fintech” is simply a combination of the words “financial” and “technology”. It describes the use of technology to deliver financial services and products to consumers. This could be in the areas of banking, insurance, investing – anything that relates to finance.

Why do people prefer fintech? ›

The fintech industry is a realm of endless possibilities, where finance and technology converge to redefine how we manage money. From promoting financial inclusion and democratizing finance to fostering innovation and collaboration, fintech provides ample reasons to fall in love with the industry.

What is the difference between a bank and a fintech bank? ›

The difference between the two is that a fintech bank uses new technologies while traditional banks still resort to archaic and time-consuming procedures and means. With regard to innovation and technological advances, traditional banks lag behind as fintechs pursue their momentum in terms of innovation.

What is the highest paying job in fintech? ›

What are Top 5 Best Paying Related Fintech Jobs in the U.S.
Job TitleAnnual SalaryMonthly Pay
Fintech Startup$114,088$9,507
Fintech Risk Management$111,556$9,296
Work From Home Fintech Compliance$98,949$8,245
Fintech Consulting$72,914$6,076
1 more row

What was the first example of fintech? ›

A brief history of fintech

The Fedwire, a centralized funds transfer service was established in 1918. The 1950s brought credit cards, reducing the need for people to pay in cash.

Is fintech a good thing? ›

The global financial technology (fintech) industry is booming, with customer demand driving growth. Fintech benefits female business owners, small enterprises and isolated communities in particular, according to Bryan Zhang of the Cambridge Centre for Alternative Finance.

Is Amazon a fintech? ›

Amazon Finance Technologies (FinTech) Payments systems disburse Accounts Payable (AP) payments to Amazon's suppliers and service providers.

Is PayPal a fintech company? ›

PayPal now has 428 million active accounts worldwide, and it continues to experience increasing engagements in transactions per user. The company is well positioned to be a fintech leader, as it excels in providing solutions for online shops and e-commerce stores.

Is Venmo a fintech company? ›

Venmo is one of the most successful and popular FinTech apps in the United States, and even though its most popular service is free, Venmo makes money and a lot of it.

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