Types of fintech
There are different types of fintechs, but not a textbook consensus on the exact classifications. We like the way KPMG groups them into two general areas:
- Financial service providers: Banks, lenders and other consumer-/merchant-facing services (usually regulated).
- Technology or processing service providers: Fintechs creating the payments, security and data processing technologies.
A company may focus on one of these areas or a mix of both. Some technology and processing providers provide the backend system for financial service providers.
In different publications online, fintech companies are often grouped into the following specialisms.
Bankingtech/Banktech: Challenger banks (neobanks) offering e-money accounts or online bank accounts. Examples are Revolut, Monzo, Monese, Starling and ClearBank.
Paytech: Services, infrastructures and technologies for payments. TrueLayer, WorldRemit, SumUp, Volt, Checkout.com, Wise and Plaid are examples.
Lendingtech: Alternative financing, crowdfunding, cash advances and loans. Klarna, Fundera, Affirm and Sonovate are examples.
Insurtech: Fintechs offering insurance and systems to make insurance models fairer and more efficient. Zego, Marshmallow and Bought By Many are examples.
Wealthtech: Investment services, robo-advisors (algorithm-driven advice) and wealth management of assets, savings etc. Crowdcube, Robinhood and Seedrs are examples.
Regtech: Fintechs using technology to enhance regulatory processes around risk management, security and identity. Quantexa, Privitar and Onfido are examples.
Deloitte also identifies quote aggregators, which are primarily online comparison search engines for insurance, mortgages and other financial products (e.g. Compare The Market). Then there is business banking, i.e. fintechs supporting SMEs with smart solutions for accounting, invoicing, payroll, contracts and expense management (e.g. Xero).
Many companies offer a mix of these. For example, the digital account provider Revolut also offers a trading platform and online payments. Apart from payment solutions, Square also offers invoicing, ecommerce and other services for SMEs.