The term Fintech refers to all those activities and companies that use innovation and technological development to design, offer and provide financial products and services in an efficient and accessible manner.
These innovative companies are revolutionising the traditional finance sector, both for individuals and businesses. Their growth has been significant and is expected to continue to rise, with financial transactions in Europe projected to reach billions in the coming years.
What types of fintech exist?
There are different types of fintech companies and they operate in different areas. Below we show you the different types of fintech companies that exist according to their technology:
Financing for individuals and companies
Personal and corporate finance companies offer consumers effective management of personal finances and the ability to compare different financial products.
These companies are responsible for providing information on the status and movements of accounts. They also offer financial products according to the needs of each user!
Fund transfers
Money transfer companies have broken the monopoly of banks. Before fintech companies, banks had a monopoly and charged high fees for transferring money. Nowadays, numerous companies have emerged that perform the same functions as banks, but without charging such high fees.
Financial and investment advice
Among the fintech companies focused on financial advice and investments, we can find:
- Automated advice and management: These platforms offer advice and capital management through automated procedures with complex algorithms and artificial intelligence.
- Social trading: Through these platforms, professional investors and professional traders contact each other to exchange financial information and opinions.
Payments and collections
There are currently numerous fintech companies that allow payments and collections via mobile devices or tablets. They are leaders in the sector and the number of businesses and platforms that allow the use of this payment method continues to grow.
What is fintech for?
Fintechs play a crucial role in various aspects of the financial world, including:
- Money transfers: Facilitate secure and fast transactions, whether national or international, breaking down geographical barriers and speeding up remittance and payment processes.
- Loans: They offer alternatives to traditional bank lending methods, through platforms that use advanced data analysis to assess the credit risk of applicants more quickly and accurately.
- Purchase and sale of securities: They provide solutions for investors to purchase and sell securities and financial assets in an agile and transparent manner, through online platforms.
- Financial Advice: They use technology such as artificial intelligence to provide personalized, data-driven advice to users, helping them make informed decisions about their personal finances.
- Investment advice: Allows investors to access advanced tools and analysis to make informed decisions and manage their investment portfolios more efficiently.
It is important to note that while fintechs offer many advantages and opportunities, they also present regulatory and security challenges that need to be adequately addressed. Collaboration between the traditional financial sector and fintech can be key to fostering innovation, financial inclusion and sustainable development in the current economic landscape.
Key differences between fintech, insurtech and health tech
Once we have detailed what each of the concepts consists of, we highlight that all three are situated in the context of digital transformation. By ending with the term tech (technology), they represent the technologization of a given area.
So fintech would refer to the technology applied in financial services, mostly referring to banking services. For example, the so-called Robo-Advisory, dedicated to the management of digital assets and based on rules, is considered Fintech. While insurance would be its little sister and refers to the digitalization of everything related to insurance.
Finally, Healthtech refers to the digitalization and technologization of healthcare and everything related to it, such as prevention or rehabilitation.
It is worth noting that in areas such as life insurance, insurtech and healthtech can overlap, as healthcare also deals with life and health insurance. The same is true for fintech and insurtech because a life insurer also deals with investment and asset management in retirement provision.
New trends in digital banking and fintech
The fintech industry has grown a lot over the years as a result of various technological developments. Discover the trends that will shape the future of fintech:
- Rise of digital and open banking: customers will be able to control the data they give to the bank and manage their accounts digitally without having to go to the branch. It is estimated that by 2026, digital banking platforms will grow annually by 11.5%. In addition, banking is opening up to new customers, allowing them to participate in new businesses and organizations.
- Development of IoT technologies: banks are increasingly using the Internet of Things (IoT) on customers’ devices to collect data and thus offer more personalized services and report on their financial situation in real-time. For example, mobile phones are already the new credit cards.
- Using blockchain: Blockchain technology makes it possible to automatically record the movement of data: how the money arrived, where it came from, how it was used, and what it was spent on. This helps protect users from fraudsters because every transaction is recorded and cannot be changed.
- Biometric authentication: security is a priority to overcome the barriers of mistrust that still exist among a large sector of the population. Biometric authentication is considered one of the safest cybersecurity techniques today.
What advantages will fintechs bring to companies?
Fintechs offer a number of advantages for businesses and are making international trade and transactions much easier and improving security. These are some of the advantages that new financial technologies are bringing to businesses.
- Increased efficiency and cost reduction: These companies leverage advanced technologies to automate financial processes with the goal of significantly reducing production costs and improving efficiency compared to traditional methods.
- Accessibility to new markets: Some fintechs enable companies to access new markets and customers that may have previously been inaccessible due to geographical or material barriers.
- Better customer experience: Fintechs can use technologies such as artificial intelligence and machine learning to deliver a better customer experience, including faster and more personalized processes.
- Greater transparency and security: Fintechs better protect customer information and data by using cutting-edge technology. They therefore boost customer trust in the company and their perception of transparency.
- New revenue streams: Some fintechs help companies generate revenue through new lines of business and innovative business models.
Why study fintech?
If you are still wondering why you should study fintech, we are going to help you sort out your ideas. We know that for many people, this sector is too new. Therefore, not everyone is aware of the many advantages that you can have by dedicating yourself and training in the fintech sector. We give you some reasons why you should study fintech!
- New technologies are no longer the future: they are the present. This means that a professional who is not currently adapted to new technologies and has not specialized in them is lost.
- Betting on innovation is always a big yes in any case: We know that it is scary and that novelty is sometimes scary. It happens to all of us! However, we can tell you that betting on specialized training in fintech is a big yes. It will open dozens of job doors for you!
- Fintech has put an end to the reputation crisis of the financial system: We were all aware that, with the Spanish economic crisis, the banking and financial sector collapsed. Especially in terms of the good reputation it had among the population. However, adaptation to new technologies has made it possible to put an end to this by offering better conditions of security and transparency to users.
