Fintech is the use of technology in the financial sector which includes banking, insurance, real estate and investment funds. The Forbes Magazine reported that by September 2016, there were over 1000 fintech companies in the world valued at US$867 Billion. As the fintech industry grows, there is an increasing number of sectors under it. Here are 10 most popular fintech sectors.
- Mobile Banking
Mobile banking refers to the service that banks and other financial institutions provide to their customers by allowing them to conduct a range of transactions using an app. The app allows the customers to access and transact with their accounts remotely. With mobile banking, you can open a new account; check your balance, transfer funds and pay bills from the comfort of your house. A study conducted in the US in November 2016 revealed that 72 percent of the financial services consumers use digital channels to open checking accounts.
- Internet Banking
Also referred to as e-banking or online banking, internet banking is closely related to mobile banking. The difference is that instead of using an app, customers use the web. You may access the web by use of your smartphone, tablet or a PC. All the transactions are conducted through the website of the financial institution. Statista notes that the share of individuals using internet banking in the UK increased from 30 percent in 2007 to 60 percent in 2016, pointing to the increasing popularity of internet banking.
Blockchain refers to a decentralized digital ledger that can record transactions across multiple computers such that the recorded transactions cannot be altered retrospectively. Participants can, therefore, audit and verify the transactions in a simple and cost-effective way. Blockchain is an online platform for digital assets. Bitcoin is the digital currency commonly used in blockchain transactions and it is gaining popularity as more and more people embrace fintech.
Insurtech is the use of financial technology in the insurance industry. Many insurance companies are adopting the use of technology and it is now possible to take an insurance cover without having to physically present yourself to the company. An individual can also file claims online.
- Predictive Analytics
Predictive analytics is the use of big data to forecast future occurrences. The fintech sector involves the use of Big Data by finance institutions to determine market trends and future profitability. Established financial institutions such as the Bank of America, Goldman Sachs and Morgan Stanley are currently seeking to make use of the data that they have accumulated over time.
Crowdfunding is a rapidly growing fintech sector. Every year, up to $3 billion is raised on US-based crowdfunding platforms. Entry of early startups in the sector has significantly contributed to its overall growth with 24 percent campaign success rate.
- Peer-to-Peer Lending
Peer-to-peer lending involves ordinary people offering credit to those who need it without involving a financial institution as intermediary. A p2p platform connects loan providers with prospective borrowers. The process allows quick, simple and fast access to credit.
- Smart Finance Management
The advancement in fintech makes personal finance management easier to all irrespective of their academic background. Apps are capable of managing accounts, automatic budgeting, asset management and finance planning. Mint.com provides one app that performs all these functions.
- Innovative Payments
Innovative payments are an important fintech sector especially in the light of increasing globalization and e-Commerce. It is predicted that by 2019, over 5 billion people will be making digital payments.
Robo-advisors are software that uses algorithms to help people make informed investment decisions. Robo-advisors are gaining prominence in the financial industry particularly in portfolio management and stock markets where they make trading intuitive, cheap and mobile. Prominent examples include Wealthfront and Betterment.
Please feel free to contact us for questions or recommendations on leading fintech sectors.