Definition of a Fintech
What is a Fintech? FinTech refers to companies, usually start-ups, that operate in the area of technological innovation applicable to financial and banking services. Their field of action extends from alternative financing for companies to online payment, including savings management, loans, bank account aggregators, etc.
What is the goal of a Fintech?
A Fintech seeks above all to offer customers better and less expensive financial services. FinTechs therefore have a disruptive approach to the world of banking, finance and insurance.
Overview of Fintech
If the financial aspect mainly evokes banks and insurance, Fintechs are therefore not limited to the banking sector alone and they concern both the market for individuals and professionals. The financial services offered by Fintechs are quite broad:
- mobile banks (online banks and neobanks),
- insurance, management of claims or contracts,
- payment solution,
- money management,
- budget management: with innovative apps such as pools, donation platforms, account aggregators,
savings “assistants” (robo-advisors for example),
- money transfer solutions,
- mobile payment,
- participatory savings,
- trading platforms (particularly in the field of crypto-currencies),
- financing with micro-credit or participatory loan (crowdlending)…
On the professional side, the range of services deployed by Fintechs is also important and varied:
- the management of expense reports,
- accounting or treasury software,
- customer relationship management, evaluation, loyalty,
- employee savings,
- payroll and pension managers
- financing with crowdfunding (crowdfunding),
- solutions for collecting payments locally or internationally,
- insurance brokers,
- Regtech to manage risks: cybersecurity, data analysis, fraud management, identity verification,
- Blockchain implementation…
- Investors around the world are following this movement with interest.
Some examples of fintechs
Among the most famous Fintechs, we can mention the pioneer and American giant Paypal (1998).
Neobanks are also famous Fintechs: N26, Revolut, Monzo, Nickel, Orange Bank, Manager.one, Qonto, Xaalys… just like online banks which have been pioneers in this disruptive field of banking with Boursorama Bank, Fortuneo, Monabanq or even ING… On the open-banking side, we can mention Linxo or Bankin.
During the advent of Fintechs, crowdlending represented a very important part of these innovative companies. Among the best known that still exist in 2021, we can mention Bolden, Edukys, Lendosphere, KissKissBankBank, Leetchi, Ulule, Lendopolis, Credit.fr, October (formerly Lendix), WeShareBonds, Wiseed, lumo, Sowefund, Miimosa, Pretup…
Among the Assisted Savings Fintechs, we can mention Robo-advisors such as Betterment, Wesave, Yomoni, nalo, Grisbee…
FinTechs are subject to specific regulations related to the world of finance. They thus belong to a regulated market where requirements and constraints are necessary to protect the consumer. This framework encourages them to form partnerships with traditional companies in the sector (insurers, banks, etc.).
Neobanks, crowdfunding, robo-advisors…
There are generally several categories of Fintech:
1. BtoC (business-to-consumer)
Aimed at the general public, for example 100% digital “neobanks”, without an agency, which offer a low-cost account and payment card (Juni), online pots like Leetchi or LePotCommun, payment applications like Stripe, as well as wealth management tools (dashboard like Grisbee) or automated investment (robo- advisors like Marie Quantier);
2. BtoB (business-to-business)
Offering financial services to companies, SMEs or large accounts, for example online currency transfer (Kantox) or dematerialized factoring (Finexkap);
3. BtoBtoC (business-to-business-to-consumer)
Like crowdfunding platforms, which connect project leaders, creators, merchants, SMEs, and investors, individuals or professionals: crowdfunding in donations with or without rewards (Ululele, KissKissBankBank, France), crowdlending (loans to SMEs, such as Lendix or Lendosphere) and crowdequity (capital financing, such as Sowefund);
Robinhood is a financial services company that allows users to trade stocks commission-free, and exchange crypto currencies.
Insurtech, in insurance: from the comparator, like Fluo, to collaborative insurance like Inspeer or Otherwise, and 100% digital health insurance, like Alan;
Regtech, companies that offer technological solutions to meet the regulatory and compliance constraints of banking players mainly (especially in customer knowledge or “KYC” in the jargon) such as Fortia or Neuroprofiler.
These companies are usually not banks; some have a banking license, such as the German neobank N26 or the British Atom Bank. They can have various statuses, approved by the financial regulator (ACPR Prudential Control and Resolution Authority-Banque de France), including payment institutions, crowdfunding investment advisers or investment service providers (crowdfunding), financial investment advisers (online brokerage) or portfolio management companies (robo-advisors).