Top 15 FinTech Categories: A Quintessential Navigating Guide
Audio : Listen to This Blog.
FinTech is the term for the process through which financial services providers incorporate technology to enhance the usability and delivery of their products to customers. FinTech companies employ technology to improve, automate, or modify financial services for individuals or enterprises. FinTech is a sector that has been snowballing and doesn’t seem to slow down anytime soon.
The global FinTech market is expected to grow at a CAGR of 23.58% from 2021 to 2025, reveals a study by Research and Markets.
Moreover, according to McKinsey and Company, the widespread adoption of digital finance can scale up the annual GDP of emerging economies by $3.7 trillion by 2025, a 6% increase owing to digital transformation, which would create up to 95 million jobs across all sectors.
To help answer this question, we’ve put together this quintessential guide to different FinTech categories and where they fit your digital banking strategy. So, without further ado let’s delve right into each of the categories to explore further:
1. Stock Trading
Stock trading involves buying and selling stocks, bonds, and other financial securities. It can be done through a broker or directly with a company.
Stock traders have many options for buying and selling stocks online: They can use their bank accounts to deposit funds into an account at their broker’s website; they may also use a digital wallet app such as Robinhood that lets you buy/sell stocks on your smartphone; or they might use a Robo-advisor service like Wealthfront which automates much of the process, so you don’t have to do it yourself. All these options are available in different countries around the world.
2. P2P Payments
P2P payments, or peer-to-peer payments, are a form of digital payment that allows users to send money to other users. They’re an alternative to traditional bank transfers and credit card purchases and are often used by friends and family members who don’t want the fees associated with traditional banking services.
P2P payments can take many forms: from person-to-person payments (like PayPal) to shared accounts for multiple people in a group (like Venmo). Arguably, the most common type of P2P system is Venmo. It can be integrated into Facebook Messenger, so you don’t have to download an app if you want to use it on mobile devices. Some of these apps offer more features than others, like Square Cash. The app lets users load money onto their debit card directly from within the application itself (no need for another account).
E-commerce is a booming industry, growing faster than any other industry in the world.
There are many e-commerce platforms out there, with Amazon leading the pack as far as the sheer number of users goes. But you might be surprised by how many other options there are for online stores.
For example, Etsy has over 7.5 million active sellers; Shopify boasts over 2 million merchants, and Alibaba now sells to more than 1 billion customers across its platforms with the help of Tmall global, which expands Alibaba’s outreach to more than 25,000 brands from 92 countries.
4. Wealth Management
Wealth management is a broad term for managing the financial affairs of high-net-worth individuals. It can include everything from managing client assets, developing investment strategies, and recommending financial products to clients. Wealth managers help their clients with all aspects of their finances—including buying or selling property—and help them navigate the world of finance in general.
Personal lifestyle changes have partly driven wealth management growth: people are living longer than ever, so it’s more important than ever that they have access to high-quality advice on how best to use their resources during this time. The industry is also attractive because it offers an opportunity for FinTech companies interested in niche markets (like peer-to-peer lending) due to its enormous potential customer base, which continues to grow rapidly despite Brexit uncertainty around future trade deals between Britain & EU countries.
5. Business Payments
Businesses need to pay their suppliers, employees, customers, and other corporations quickly. They also want to pay taxes on time. FinTech companies have developed several products that help businesses make payments faster:
- B2B payments – these are usually made using an e-payments platform like Stripe or PayPal. The company can send an invoice directly through the forum without having to go through a third party like Paylocity (for example). This saves time and money because it eliminates delays in processing fees associated with taking payments over traditional methods such as checks or cashier’s checks.
- B2B invoicing – You’ll find most vendors offering this service today.
- Ecommerce integrations – if your online store includes payment options for credit card payments, then you might want to look into integrating one of these services into your checkout process so customers can choose how they want their order fulfilled before making their purchase decision.
6. Digital Banking
Digital banking has become one of the most prominent FinTech categories in the world. It is a way of banking that is done primarily online or through a mobile app. This type of banking allows customers to conduct transactions and manage their finances from anywhere at any time. Digital banks may also offer additional features, such as AI-powered chatbots that enable customers to communicate with the banks and websites with a similar look and feel to traditional banking websites.
7. Cryptocurrency and Blockchain
You may have heard of blockchain before, but if you need more clarification on what it is and how it works, let’s break it down.
Blockchain technology is the underlying technology that makes cryptocurrencies possible. It was invented by Satoshi Nakamoto — who remains anonymous to this day — in 2008 and has since been used in many other industries besides financial services. Its primary purpose is to create a decentralized ledger (or database) where transactions are recorded and verified across multiple computers without relying on one central authority like banks or governments; instead, these transactions are transparently shared between all participants in an ecosystem so they can be trusted by everyone involved.
There are many potential applications for blockchain beyond just cryptocurrency: healthcare records could be stored on this type of database so that doctors could access them anywhere; student grades would be recorded here as well; even voting could take place on such networks with no need for third parties like election officials!
8. Enterprise Tools & Software
Enterprise tools and software are a broad category, encompassing everything from cloud computing to SaaS (software as a service), SDKs (software development kits), POS (Point of Sale), and more.
The following are some of the most common enterprise technology categories:
- Cloud Computing – This includes anything related to using cloud-based services for business applications or data storage/management. For example Amazon Web Services or Microsoft Azure.
- Software As A Service (SaaS) – This is software that you pay per use rather than per license or subscription basis, like traditional software licensing programs do (such as Office 365). Many different types of SaaS offerings are available today, including CRM systems like Hubspot CRM; collaboration platforms like Slack; mobile apps for iPhone users such as Google Maps; email marketing solutions such as MailChimp & GetResponse, etc.
- Software Development Kits (SDKs) – SDKs provide tools and libraries that allow developers to create software that interacts with a specific platform, such as Windows or MacOS, or service.
- Point of Sale (POS) – POS is an Enterprise Technology Category that is used to manage and process sales transactions. It qualifies as a major FinTech type because it allows businesses to track and manage their sales data in real time, as well as accept payments from customers. This can help companies to improve their sales processes and make more informed decisions about their products and services. Additionally, POS systems can help businesses reduce the risk of fraud and increase security for their customers’ data.
InsurTech is the practice of using data to make insurance more efficient. The most obvious example of this is a company like Progressive Corp that uses your past driving history and other information to recommend which insurance products you should be buying. Other examples include underwriting deep learning & NLP models that use machine learning to make predictions about how likely it is that someone will file a claim or crash in the future based on what they’ve done previously; actuarial modeling tools used by insurance companies to estimate costs associated with certain risks; and even new types of technology like virtual agents who help customers find the right policies for them (and even answer questions about their coverage).
Insurance companies are starting to invest heavily in InsurTech because it’s an incredibly profitable area for them — especially when compared with traditional financial services industries like banks or mutual funds.
RegTech is a technology that helps organizations comply with regulations. It can be used to automate processes and reduce costs, detect fraud and prevent money laundering, as well as improve customer experience.
RegTech is a broad category that includes software solutions for KYC (Know Your Customer) compliance, AML (Anti-Money Laundering), privacy protection, and other regulatory requirements.
SupTech is a relatively new term that is used to describe the use of innovative technology within the area of financial supervision. SupTech can be seen as a response to the increased demand for more sophisticated and automated supervisory technology solutions. It enables financial institutions to easily meet regulatory requirements while helping supervisory agencies manage risk more effectively. It covers a range of activities, from digitizing reporting processes to using big data and analytics to improve risk monitoring, leading to a better understanding of risks and compliance issues and, ultimately, a more stable and secure financial system. SupTech solutions can typically be grouped into the following categories:
- Data Management and Analysis: This includes tools for data cleansing, extraction, consolidation, and analysis. These are used to help supervisors identify and monitor risk trends across the financial sector.
- Regulatory Reporting: This covers a wide range of solutions that help institutions generate and submit reports to regulators promptly and accurately. This includes everything from electronic filing systems to software that automates the production of reports.
- Compliance Monitoring: This category encompasses tools that help supervisors track and assess compliance with regulations across the financial sector. It might include systems for tracking customer data or monitoring employee activity.
12. Open Banking
Open banking is the practice of allowing consumers to access their financial data without having to ask for permission. This can include any bank account, credit card, or loan product. It’s an important step forward in the fintech movement that will allow people to take control of their own money and get access to better services from their bank.
The benefits of open banking include the following:
- Improved customer service – You’ll be able to manage your finances from anywhere with an internet connection if you have access to a smartphone or tablet device (or even just a computer).
- Increased transparency – The more information available about what goes on behind closed doors at banks, insurers, and other financial institutions means that consumers can make more informed decisions when deciding whether they want any part in them anymore.
Crowdfunding is the practice of raising funds from a large number of people through the Internet. Crowdfunding platforms allow individuals, companies, and organizations to ask for money for projects or ideas by asking for donations. If enough people contribute funds toward your project, you’ll be able to raise more than what was needed to make it happen.
Crowdfunding has become popular in recent years because it provides an alternative way for startups and small businesses (and individuals) who might not otherwise have access to capital without going through traditional lending institutions like banks or venture capitalists.
14. Robo Advisors
Robo advisors are automated investment tools that help investors manage their portfolios. Robo advisors use algorithms to manage portfolios and typically charge lower fees than traditional advisors.
Robo Advisors make it easier for investors to manage their portfolios by doing the following:
- Automatically rebalancing your investments based on historical performance (for example, if you put money in stocks at one point in time, it will automatically move that money into bonds or cash until you’ve reached the desired balance). This can be done manually or automatically—it’s up to you!
- Providing portfolio recommendations based on certain criteria such as age and risk tolerance (for example, telling someone who wants low-risk/high-return investments how much they should invest).
15. Budgeting Apps
Budgeting is a habit that can help you save more money, set better spending habits, and plan for the future.
This is important because credit card companies, banks, and legacy players are all fighting for your business. If you’re not careful about how much money you spend each month—and what those expenses are—you might fall behind on bills or miss payments altogether. That’s why it’s so important to use budgeting apps like Mint and Personal Capital (a popular investment management platform). These apps help you make wiser financial decisions with the help of features like “Spend Trackers,” which help track and fix your spending targets.
Evidently, different FinTech categories will have a long-lasting impact on the financial sector. Each of these categories offers a unique POV for customers, which will continue to transcend the FinTech realm. Simultaneously, with the rapid progression in FinTech technological advancements, it’s likely that these categories will only become more popular and widely used.
FinTech is a dynamic and fast-growing industry that offers disruptive technological advancements to traditional financial services. MSys Technologies is a leading provider of FinTech services, with 8+ years of experience, 2000+ dedicated domain experts, and FinTech engineers.
We offer custom consultation and end-to-end engineering services to help our customers overcome regulatory compliance hurdles, better manage risk and improve operational efficiency. We are committed to helping you meet your end-to-end requirements across all the above categories.
Feel free to contact us to discover how to triumph over the FinTech landscape by leveraging state-of-art services and architect trajectories for perpetual success.