What is a Fintech Startup? – How do Improve, Types, and More
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What is a Fintech Startup?
The Fintech startup comprises the digitization of the financial sector. All those companies use new technologies to offer financial services simpler than those currently offered by banks.
Digital media give its appeal to offer new responses to users of financial products. She is basing its virtues on simplicity, agility and safety in its handling. And also, fintech Startups are developing a new landscape within the financial market.
This service type is gradually assuming an important part of our society and facilitating banking services through intuitive and more understandable applications. Simplicity, agility and security are the keys to these new services.
How do they Improve the Fintech Startup?
Fintech Startups not only bring new competitors to the financial market. They also transform how the consumer interacts with and accesses these types of products.
And also, some that previously, due to accessibility or ignorance, were unknown to him.
This new approach and making financial services available is possible thanks to the technological support behind the Fintech ecosystem.
Especially in the design of pleasant, accessible and attractive applications and user interfaces, Fintech Startups offer their products to clients “at the click of a button”.
Thanks to Fintech, the so-called democratization of financial products has been achieved. Making available to the end consumer in a more simplified and accessible way, they would not otherwise know or access many products through traditional banking.
This must be related to offering a good user experience and access to the user, offering Fintech Startups in general terms more specific and personalized products, translating into personalized attention to user needs.
And also, a benefit of this type of startup is that they manage to save and reduce services’ costs—especially those derived from processes and procedures.
Likewise, this cost-saving is not exclusive in the financial management section but includes the user’s travel to the bank’s office or subject to the entities’ schedules.
And also, the service is now available 24/7 from your smartphone.
In short, Fintech companies open us up to a new paradigm of managing our money in a comfortable, accessible, transparent and, above all, fast way.
Types and Characteristics of Fintech Startup
Fintech Startups are dedicated to offering intermediation services in the world of finance in multiple ways. From money transfers, loans, access to the currency and cryptocurrency market or stock and investment markets.
The breadth of the Fintech market area means that new types and services related to them are born every day, the following being currently the most widespread:
1. Payment Methods
The emergence of apps that replace physical money and credit cards coincides with the entry into force of the PSD2 Directive.
They are usually found as means of payment associated with a bank card or directly from our Bank Account.
And also, an example of this App is, for instance, Way app Pay.
2. Fund Transfers
Fintechs focus on transferring funds and money transactions efficiently and agilely, with lower transfer costs than traditional banking; even free.
And also, PayPal was a pioneer in this regard, and its path is followed by Fintechs such as Bizum.
These Apps offer the user a user-friendly environment to access investment markets, businesses, or companies.
This access can be to traditional investment markets, or Fintech itself creates its investment micro-market.
And also, as an entrepreneur, the user can access an investor to use this medium to finance itself.
4. Financial Advice
They are known as Robo Advisors. These Fintech companies base their technology on automation and machine learning to offer financial advice to SMEs, Startups or private consumers in a general way, but at the same time, with a certain degree of personalization.
And also, they save time and money since the user’s cost is limited to the specific advice and the contracted products.
5. Personal Finance
These Apps inform the user in a simple and accessible way about their finances. Such as income, payments, direct debits, savings, breakdown of expenses.
And also, lately, they tend to be integrated into other Fintechs, such as banking Apps, and autonomously, such as the famous Fintonic.
Outside of the very demanding and controlled scope of bank credit, new ways of offering loans to consumers and companies are emerging.
7. P2P Loans
Loans made and offered directly between Fintech users without third parties’ intervention (banks or credit agencies).
The digital micro patronage. Crowdfunding is a network of collective financing through economic donations to finance a certain company or project in exchange for a benefit.
Crowdlending is a form of financing for companies and projects, also distributed. Instead of offering products, services, or participation in the company, it provides the invested capital and interest return.
And also, it allows financing through a financial community without resorting to traditional financial services, in addition to accessing a greater number of investors.
Distribution of Financial Products of Fintech Startup
The objective of these Fintechs is to group financial offers by sectors and offer disaggregated and segmented information to their users for contracting their services, showing the main characteristics, advantages and disadvantages of each product on the market.
1. Financial Comparators
Comparison of financial products such as loans or mortgages, offering basic information on each development and company’s operation on the market.
2. Lending Comparators
They are based on algorithms that differentiate the advantages and disadvantages directly from the lending loan platform’s offer.
3. Deposit Comparators
They offer comparative information on the main bank deposits and the profitability they provide for your savings.
4. Real Estate Supply Aggregators
These collaborative economy platforms index the real estate offer, creating a portfolio of real estate assets through which the user can invest in real estate.
5. Currencies and Cryptocurrencies
These Fintech companies make available to the general public the possibility of investing in the foreign exchange market, informing the user of each currency’s prices, evolution, and the different needs to go.
These Fintech companies can be dedicated to the traditional currency market or the new cryptocurrency market based on Blockchain technology.
And also, fintech can incorporate means of payment associated with cryptocurrencies and so-called digital wallets in the latter market.
6. NeoBanks and Challengebanks
Fintechs offer traditional banking services, but exclusively through mobile and digital platforms, without having a physical presence in branches.
In the case of Neobanks, they are entities that are behind or associated with a traditional bank, creating their Digital model in parallel thanks to this support.
Challenger banks are Fintechs that work through a Banking License. They purely entities protected by the Deposit Guarantee Fund and subject to traditional banking regulations in line with the technological innovations that Fintech implies.
Insurtech is the phenomenon of the transformation of the insurance market adapted to the new Fintech technological environment.
These disruptive Startups offer risk assurance services on the technological basis of Blockchain, Big Data or Cloud Computing for the generation of insurance products and their management.
From all this, we can see that the Fintech Sector is in a continuous expansion offering new services and possibilities to the user every day to improve their experience and financial capacity.
And also, let slaw a law firm with professionals specialize in advising Startups and Fintechs and data protection, digital law, and intellectual property.