Key Trends Shaping Fintech Startups Today

The fintech sector is both broad and diverse. Different companies exist in different categories, which serve distinct functions. That diversity fosters innovation and competition within the sector.

Some key types of fintech:

• Digital Banks

• Payment processors

• Lending platforms

• Robo-advisors

• Insurtech and RegTech companies

Fintech Startups are leading the way. They serve distinct market segments and needs, either at the simplest transaction level to complex investment strategies. 

The fintech definition is similarly reflected in that diversity and innovation. Explore more about the fintech ecosystem and key players.

Digital Banks and Neobanks

Digital banks embody the future of banking, dispensing with physical branches and delivering all of their services online. Customers enjoy 24/7 access, along with generally lower fees.

Neobanks are a step beyond digital banks. 

Neobanks usually concentrate on niche markets, which are often underserved by the big banks. Neobanks provide customized financial services to its customers, and it does that in the extremely convenient, fully-digital world that we live in today.

Payment Processors and Digital Wallets

Payment processors assist companies in handling transactions efficiently. These companies help ensure that money is exchanged seamlessly between purchasers and sellers. 

Payment processors, through their secure infrastructure, allow companies and consumers to trade successfully and quickly with anyone anywhere in the world.

Digital wallets create convenience for users. They keep user payment credentials secure and facilitate quick transaction capabilities. 

Digital wallet technology also supports a shift away from cash into cashless societies, illustrating the transformational power that fintech brings to society.

Lending Platforms and Peer-to-Peer Finance

Borrowers are seeing a very different borrowing experience with lending platforms. These marketplaces usually connect you directly with the funder instead of relying on a bank to lend you money, and often for a faster process.

Peer-to-peer finance is an emerging alternative (with competitive rates and favorable terms) alongside many fintech startups (e.g., some peer-to-peer lending sites, the originators of the peer-to-peer concept) and aggregators of loan marketplace players.

These firms are changing the lending marketplace by democratizing credit access and promoting social financial inclusion. If you want to compare financing structures, see business lines of credit as one example of how fintech improves flexibility.

Wealth Management and Robo-Advisors

Robo-advisors are becoming increasingly popular in wealth management. They provide automated, algorithm-driven financial planning. Users receive personalized advice without the high costs involved.

Wealth management firms are taking advantage of the latest fintech tools in order to provide user friendly services. They want to serve investors of all shapes and sizes and use big data to inform users of their investment choices.  

These tools allow users to manage their investment portfolio as they see fit with additional guidance.

Insurtech and RegTech

Insurtech companies disrupt traditional insurance models. They use technology to streamline the claim process and provide better customer service derivatives. 

This means more high touch, personalized insurance products offering better pricing and greater competition.

RegTech is concerned with regulatory compliance. RegTech makes it easier for a company to understand and comply with complex financial regulations. 

To do this they utilize technology to provide automated or lower cost compliance and open a range of opportunities that would not be possible without technology, size and scale. 

RegTech is particularly useful for fintech companies operating in a challenging regulatory environment.