There are several categories of Fintech, which are called vertical: Payments, loans, advice. And within each of these verticals there are other subcategories.
The most important of all this is the vertical specialization: each Fintech is dedicated only to a very specific service, which responds to a very specific and digital financial need. All the efforts of a Fintech team are focused on one objective.
For all this, new Fintech are appearing every time that digitally develop existing financial services or create new products or services.
Crowdfunding: It is an alternative to banking intermediation. It puts in contact entrepreneurs, SMEs or individuals who demand financing with investors of all kinds. Crowdfunding is the financing of a project or initiative by a group of individuals (people or companies), rather than professionals (banks, savings banks, venture capital investors). Personal Equity.
Currently this type of financing is developed, mostly, through Internet platforms. There are different types of Crowdfunding:
Reward: offers a product or service as consideration for the investor’s contribution.
Donations: does not offer a return to the people who contribute the funds. It generates the satisfaction of being part of the project.
Investment: offers the participation in the capital of a company as consideration for the contribution.
Crowdlending: offers the investor the return of the amount invested plus the applied interest. Replaces banking intermediation.
Real Estate: The purchase of real estate is done jointly with several investors. It is not necessary a large outlay of money.
Financial advisory platforms:
The automated investment platforms, robo-advisor and Quant Advisor, have proliferated in the last two years. It is about Fintech that offer financial advice and portfolio management in an automated way, based on algorithms. There is practically no human intervention in decisions or investment advice.
In addition to platforms that use robo-advisors technology, there are also Fintech advisory and management platforms that do not use automated technology to make investment decisions.
Payments and transfers:
The digital means of payment avoid the use of cash and cards (plastic). This category is highly developed by all current financial actors, including traditional banking. PayPal is the BigTech of electronic payment and is the queen of Internet payment intermediation.
Electronic payments are growing exponentially, mobile transactions are helping to a large extent to that development. Platforms such as Bizum, created by financial institutions, are an example of the importance of online payments in the financial sector.
Digital currencies and their technology
Bitcoin, which is a cryptographic currency whose support is digital, and Blockchain, which is the technology behind it, also used for other financial and non-financial areas. It is the most used digital currency today, although there are also many other digital currencies such as Ethereum, Ripple, Cardan.
Comprehensive management of finances
PFM & Personal Advisor: Platforms that allow you to see on your digital device (Smartphone, Tablet, laptop) all your accounts, invoices, movement in a joint or aggregated way (at a glance).
Also published on Medium.