about fintech
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You have probably read and heard the term “fintech” many times. But what does it really mean? Let us figure it out together. The very structure of this compound word can give us a clue, It is comprised of financial + technology. Fintech stands for a business industry made up of companies using technology to provide financial services such as funding for small business, for instance, more efficiently.

FinTech companies use modern technologies to change, further develop or offer completely new solutions in traditional business areas.

Fintech is Worth Using It

Some bankers are still confused when hearing the word “hitech”. Technology and also efficiency are words that in the view of some companies can’t be put together. It is a big mistake, cause the consequences of their old-fashioned approach is redundancy of employees and no streamlining of processes. In the world of electronic stock exchanges and automatic high-frequency trading companies, which use fintech and follow fintech news, they have already got a first impression of the future.

The U.S. is strongly involved in the fintech market. In 2014 American Fintech companies offered 200 000 jobs in this sector. The main fintech organizations are situated in New York City, San Francisco Silicon Valley, Boston and Washington DC.

According to the data, collected in 2016, 52% of men and 46% of women can imaging making the majority of their banking transactions via smartphone in 2021.

There are quite a few directions for fintech investment. Let us describe some of them.

Payments and transfers

This segment combines wallets, money transfer services, payment gateways for online payments, etc. It accounts for up to a third of all investments in fintech, and the largest national fintech companies are created in the sphere of payments. However, the income is rarely more than 2-3%, and one can earn a lot of money only on a large scale. That is why the main payment companies PayPal, conducting transactions for almost $100 billion a month, grew thanks to close relations with the world’s largest trading platform eBay.

Another fast-growing subcategory of this segment is money transfers. Investors are attracted by the scale of this market (more than $500 billion a year) and the presence of huge inefficiencies at it(for example, the cost of international transfers in some cases reaches 10% or more).


This is probably the most understandable segment for the users of the market. Almost 60% of modern banks’ profit is concentrated on credits. Its active development began after the crisis of 2008 when due to regulatory changes it became less profitable for banks to lend money to certain groups of borrowers.

The first big stories in this segment were companies that do not compete directly with banks, but rather go beyond their clients (there are about 2 billion people in the world who do not have access to banking services).

A good example in this sphere is Personal Money Service, which helps you find a perfect lender online. You can get money into your bank account within one day without going out.

Asset management and investment

Existing mechanisms of asset management and available ways of investing funds are often confined to a narrow circle of customers: these are either professional investors or people with a large fortune, serviced by professional financial advisers.

Also read: Online business as an investment.

But with the development of technology, it becomes possible to automate and reduce the cost of many processes. This is what fintech companies do.

One example is robo-advising when the algorithms offer the client an investment structure that is appropriate to his preferences and risk profile, thus reducing the annual maintenance costs go down from 1-2% to 0.3-0, 5%. The reduction of costs, the convenience of using a product and the democratization of access are the basic offers of fintech startups.

This segment also includes numerous crowdsourcing areas. Many people are already accustomed to investing in pre-orders of projects on sites like Kickstarter (crowdfunding). On the contrary, investing in shares of private companies in the same way (crowd investing) is only gaining momentum.

Digital Bank and Personal Finance

Digital Bank and Personal Finance
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In fintech sphere, the client’s settlement account is the face of the cooperating organization. All the payments, loans and investments should be presented as well.

This is the way modern banks work.  They are mostly based on existing banking infrastructure. Thus new startups create infrastructure from zero.

Another important category of this segment is the start-ups that manage personal finances.

For example, Credit Karma allows users to get free access to their credit rating and credit history (which earlier cost $100) and keeps records of all financial products used by the client.


The insurance industry of the United States, though valued at $5 trillion, is still one of the most non-technological spheres. Some insurance companies have got 100-year experience and are very reluctant to innovations. People still have to pay to 10% commission to insurance agents.

Lately, the creation of the digital insurer from scratch became trendy.  Bright Health is a successful fintech startup in the insurance sphere. It received $80 million investment raising funding up to $240 million in April 2016.

So gaze into the future of fintech and join its advantages!