What Are the Different Fintech Types & Which Should You Choose in 2023?

Being primarily applied only to financial and banking institutions, fintech technology today evolves extremely fast, yet is integrated across many customer-oriented industries. According to Investopedia, the most common ones that utilize fintech include education, retail banking, fundraising and nonprofit, investment management and so much more. 

In this article, IdeaSoft specialists provide a detailed overview of the fintech types with relevant examples to help you identify which one will work best for your business needs. Additionally, we’ll share an expert opinion on the most prospective fintech sectors for the upcoming years and proven tips for choosing the right IT company for your fintech project. 

Table of content:

1. Fintech in Numbers: Key Industry Insights
2. What Are the Main Types of Fintech?
3. What Are the Real-World Examples of Fintech?
4. Fintech Types with the Highest Potential for 2023 and Beyond
5. How to Choose the Best Software Company in Fintech Sector?
6. Summary

Fintech in Numbers: Key Industry Insights

The potential benefits provided by fintech motivate more and more businesses to invest in the financial technology industry heavily. Increased accessibility and adoption, higher cost-efficiency, and a growing number of startups within the industry became the key pillars of the fintech market development. 

Does that mean that investing in fintech solutions can benefit your business? Absolutely! 

Here are some insights that only prove that:

• From the estimated $133.84 billion in 2022, fintech revenue is projected to hit $556.58 billion by 2030, growing at a CAGR of 19.50%. 
• Only for 2023, the fintech market is expected to generate $26.1 billion in revenue. And, with extensive integration of the innovations like AI and machine learning (ML), blockchain, big data, and other solutions, those numbers can be even higher. 
• Compared to 2019, the number of fintech startups worldwide has doubled, according to Statista. While the first giant boost was caused by global digitalization, the next is expected to be driven by AI and ML.

Once you’ve decided to invest in your fintech solution, understanding the major types of fintech and their architecture specifics can greatly help build a successful and competitive product for your business. 

What Are the Main Types of Fintech?

Whether you’re a startup or company owner, you’ll want a powerful solution that is fully tailored to your business goals and can deliver the best value for its cost. Our team has prepared an expert overview of the core fintech categories, explaining their specifics and the advantages you can get upon this software integration.

Consumer Banking (BankTech)

BankTech is an extremely common type of fintech company, which is aimed at making financial and banking services more accessible and convenient for the average customer. 

Digital platforms, mobile apps, and online services in consumer banking help businesses to optimize and automate traditional services, as well as implement advanced fintech solutions such as portable AI advisors and risk-assessing tools.

Payments (PayTech)

This type of fintech solution is focused on developing and facilitating innovative payment technologies and services in B2B and B2C niches. Along with the commonly known digital payments and mobile payments, some other popular PayTech segments include biometric payments, payment gateways, cross-border and peer-to-peer (P2P) services, open banking, and APIs. 

Talking about the numbers, the global PayTech market size was valued at $81.03 billion in 2022 and is expected to exceed $304 billion by 2030. Such impressive growth is mainly explained by the increasing adoption of fintech payments across various industries, from retail and eCommerce to healthcare and transportation. 

Personal Financial Management (PFM)

With the rise of digital finance tools, meeting financial advisors in-person has become outdated. Now, the PFM solutions help users to enhance financial literacy and take control of their finances, make informed decisions, and work towards the financial goals set.

The popular features of the AI-powered apps in PFM typically cover budgeting and expense tracking, account aggregation, goal setting and financial planning, cash flow management, financial insights, and data analytics, and so on. Additionally, the PFM solutions may integrate with other fintech sectors (investment or loan platforms, for instance) to provide a seamless and holistic financial management experience.

Digital Wealth Management

A relatively new segment of fintech in banking, which leverages the power of technology and algorithms to provide automated and data-driven investment management services. Advanced solutions like AI, machine learning algorithms and big data provide simplified and personalized approaches to creating investment portfolios based on individual investor preferences, risk tolerance, and financial goals. 

At present, this niche is highly attractive for startups and established companies in fintech: by 2030 the global wealth management market value is expected to double to the impressive $3.43 trillion! 

Lending (LendTech)

LendTech types of fintech companies mainly focus on applying digital solutions to enhance the landing processes, such as loan origination, underwriting, servicing, and collections. Despite a comparatively small market value (only $8 billion in 2021), this industry is projected to reach $61.9 billion over the 2021-2031 forecast period. 

Moreover, the intensive digitalization and AI integrations open up many development opportunities for new startups and established ventures.

Insurance (InsurTech)

One of the most perspective fintech types that, with the help of AI and ML technologies, can significantly enhance the services for new and existing customers.

“AI integrations can open up a wide range of personalization opportunities for InsurTech. Companies can get an in-depth analysis of each request and provide a cost-efficient coverage plan that ideally matches all the needs of their clients.”

Herman Stohniiev, CTO at IdeaSoft

At the same time, the AI-powered InsurTech solutions enable reaching new customers that don’t have insurance coverage, helping them to access the required services quickly. 

Regulatory (RegTech)

A fast-evolving type of fintech companies that applies blockchain and data analytics, AI, and ML-based solutions to facilitate compliance with regulatory requirements. Today, RegTech is applied across various niches, with the biggest impact on finance, banking, and healthcare segments. 

By 2026, the global RegTech market is expected worth $19.5 billion, growing at a CAGR of 20.8% – as fast as the average of the fintech industry!

What Are the Real-World Examples of Fintech?

So as to better explain fintech categories and why they’re worth the hype, let’s now review the successful implementations of these solutions across different niches. 

1. Venmo (PayTech) – a digital wallet for in-app P2P payments that allows seamless sending and receive money via mobile devices;
2. Bolsa Bank (BankTech) – an innovative solution based on the neobanking concept. It provides internet-only banking services similar to traditional institutions. Compared to standard in-person branches, it provides lower fees and more competitive rates due to workflow automation and digital-only customer support;
3. Securitize (Asset Management & Investment) – the advanced issuance platform for digital securities created by IdeaSoft developers. The platform enables cross-border transactions using the blockchain protocol, ensuring efficient, compliant, and secure trading of tokens;
4. Green Dot (BankTech) – a consumer banking solution with similar functionality to a debit card. Through its mobile banking app, customers can make deposits, payments, and withdrawals and manage their expenses 24/7. 

Of course, these are only a few examples of how fintech helped launch innovative yet profitable solutions for startups and established companies. However, with the right expertise involved, you can expand this list with the custom fintech solution for your company!

Fintech Types with the Highest Potential for 2023 and Beyond

Is there a future for fintech solutions in your industry? We’ve asked Herman Stohniiev, CTO at IdeaSoft, for a professional assessment of the fintech sector development over the next decade. 

“Fintech segments will get a huge boost from blockchain and AI integrations. In particular, we’ll see notable improvements in:

• Cross-Border Payments – these will become more cost-efficient and accessible, especially for the countries that develop;
• Personal Financial Management – tech innovations such as big data, AI and machine learning will help customers get powerful and highly personalized budgeting and financial management recommendations. The first attempts of such can be already traced in Mint and NOMI platforms;
• Digital Wealth Management – this niche will become more helpful in data-driven forecasting and advanced financial analytics. Moreover, we assume that such tools will be extremely helpful for creating solid investment portfolios and effective wealth management recommendations;
• InsurTech – powered by AI technologies and ML algorithms, these solutions will be able to deeper analyze insurance requests, providing relevant and effective insurance plans for each case depending on the client’s budget, expectations and needs;
• Asset Management – blockchain integration will continue to foster the development of securities and revert tokens as a new segment in the crypto asset management niche.”

With this said fintech is a perspective industry that can open up plenty of optimizations and innovations to nearly any project. However, to make the most of your custom solution, make sure to hire the best team of fintech specialists with a proven experience in your selected niche.

How to Choose the Best Software Company in Fintech Sector?

When choosing the best software company for your fintech product, there are several crucial factors to consider:

1. Target fintech Segment. It’s essential first to identify what type of fintech solution you need to develop based on the target business goals and needs. Today, there are plenty of different areas introduced on the market: digital banking, P2P lending, B2B and B2G fintech, investment platforms (WealthTech), InsureTech, PerTech, API-based bank-as-a-service platforms and so much more. 
2. Fintech Software Type. Next, choose the software category that fully matches your industry and the required functionality. Some of the popular fintech examples are software for billing and payment, financial fraud detection/risk management, investment/expense management and finance planning, CRM blockchain solutions and others. 
3. Technology & Expertise. When launching a custom fintech product, you’ll surely want to get top-notch expertise involved. Based on the software architecture, you’ll be able to find out what tech stack, resources and skills are the most helpful for your project. Getting the right fintech developers has a huge impact on the final result, so it should be among your top priorities. 
4. Project Budget & Development Timeline. Budget planning is a proven way to build a robust development strategy for your fintech software. Along with finding the on-budget expertise, you can keep track of the current dev stage and prepare the project for the official release. 
5. Hiring Model. The final pillar of any fintech product that matters when building a custom solution for your business is the hiring model. If you’re missing the required expertise, need add-on dev assistance, or want to entrust the technical aspects to professionals fully – then opt for the reputable outsource development companies. An experienced team of specialists, such as IdeaSoft, will analyze each of the fintech types and relevant case studies, helping you to create the right dev strategy and successfully implement it. 

By following these basic rules, business owners can build a robust strategy for their project and launch a cost-efficient and functional fintech software that ideally matches their current goals and needs!

Summary

There’s a wide range of powerful solutions powered by the fintech sector. And, as you can see, with the right type of fintech solution businesses can enhance their performance by driving higher revenues improving client service, and boosting their competitiveness. 

At IdeaSoft, we understand how important is every stage of custom software development in fintech. With over 250 successful solutions in our portfolio, our team has vast expertise across different fintech categories, helping our clients to implement the best solution for their needs. 

Looking for a professional development team in a particular fintech category? Need an expert quote for launching custom software for your business? 

Contact us today and get the top-notch tech solution for your business from IT professionals!