Fintech apps are new and rising trends in financial services and technology. The rise of fintech apps has made it easier for transactions and financial services to reach a larger audience. People can make quick transactions without going to the bank or requiring physical interaction.
You might have wondered which fintech app fits my financial service needs. How can I get the best fintech app service? Is it preferable to stay with my bank app and not risk compromising my financial data?
This article will briefly introduce you to all you need to know about the types of fintech apps available to you.
As a foundation, the word “Fintech” is coined from two words: “finance” and “technology.” While the app is an abbreviated version of the word “application.”
What is a Fintech App?
A fintech app is a mobile application developed by technology companies or financial institutions to offer financial services to individuals. Fintech apps are also used to automate and improve the delivery of financial institutions’ services.
Fintech apps are regulated by the financial regulatory bodies in the country in which they are established. This is to ensure that there is a regulation in all financial institutions.
Please take note that not only banks can create a fintech app, but also tech companies that are registered and certified.
Let’s introduce you to the types of fintech we have. This will expose you to the services and benefits of these apps.
Types of Fintech Apps
The types of fintech apps used by people around the globe are:
? Digital Banking Apps
? Loan Apps
? Insurtech Apps
? Payment Processing Apps
? Robo-Advisor and Investment Apps
? Personal Financial Management Apps
? Tax Filing and Management Apps
Digital Banking Apps
Digital banking apps are developed to automate and digitalise most or all banking operations within the four brick walls of a bank. Banking apps create an avenue to do with customers’ to transport themselves to the banks for every transaction. The benefit of digital banking apps is that the general public can access bank products and services via mobile platforms.
Financial services on the Digital Banking apps are:
? Account opening
? Account Balance Verification
? Statement of Account Balance
? Funds transfer
? Payments of funds
? Taking a loan
Digital banking is available 24/7, and the bank’s management regulates it. You can perform automated payment systems, cash flow management, and investment opportunities. Aside from these, you can track your expenses and credit score, automatically deposit money, and separate funds.
Examples of digital banking apps are; ANNA money, Starling Bank, N26, Qonto, Capital One Mobile, etc.
Loan apps are created to facilitate the lending of funds. Loan apps connect the lender and the borrower directly without meeting physically. It removes the barrier of physical contact, which some say hinders credit services.
Banks create loan apps and credit unions, and recently, the new trend is the support of peer-to-peer (P2P) lending.
Banks and Credit Unions
Banks give out loans to their customers or the general public at an interest rate, and creating loan apps helps the population get hassle-free access to these loans. Credit unions are similar to associations, institutions, unions, etc.
Peer-To-Peer (P2P) Lending
P2P lending makes it available for people to lend their money as an investment to borrowers at an interest rate. The P2P loan app gives you two options: you can register as a lender or a borrower. The P2P app is regulated by the borrower submitting necessary details like a statement of account, showing their account history, credit score, transaction history, bank account, work history, etc. If the lender approves, this detail makes the borrower eligible to take up loans.
Users who register as lenders on the P2P app can browse through the details of the borrowers to select to whom they want to lend their money. The lender can contact the borrower directly or through the app institutions.
After getting the loan, the mode of payment is enforced and monitored on the app. The app generates its income by getting a percentage of the loan as a transaction fee.
Insurtech is simply merging the words “insurance” and “technology.” The insurance tech enables the insurance company and its policyholder to capture and assess the risk easily. The policyholder can easily apply for insurance coverage, process claims, and access other insurance policies.
Insurtech is a new niche in fintech, but its growth is rapid, with an estimated market volume of $10.14 billion by 2025 from Mordor intelligence. The Insurtech app is effective with smart technologies like IoT, drones, artificial intelligence, etc. These technologies draw maintenance patterns from the data gotten from the lifespan of the object insured.
The benefits that the insurtech app provides are:
? Easy access for the public to insurance coverage
? Removal of the tedious and infuriating process involved in getting insurance physically.
? Removal of typical insurance agents who are after ludicrous gains.
? Variety of insurance policies that suit your needs.
Examples of insurtech apps are Lemonade, Planto, Hippo, etc.
Payment Processing Apps
Companies and individuals use these apps to handle their payment transactions. Payment processing apps are like middlemen in business transactions. In the e-commerce ecosystem, they play a role in making commercial services more widely available. They bridge the gaps between institutions’ different financial policies. They offer foreign exchange and instant payment on a large scale for individuals and small-scale businesses. Examples of payment processing apps are PayPal, Stripe, Wise, Razorpay, Square, etc.
Robo-Advisor and Investment App
Robo-Advisor is an automated mobile application that serves as a broker to help its users with forex trading, investment making, and managing their portfolios. It uses machine learning to study trading patterns and artificial intelligence for assessing financial capacity and risks.
On the other hand, Investment Apps are developed to make investment opportunities available for the populace and not only for the wealthy. Different investment apps make it available for different classes of people to invest their money at a different return on investment (ROI) level.
The advantage of Robo-Advisor and investment apps is that they create room for newbies to trade without risk and make a profit. Also, investment opportunities are available for the general public, thereby achieving crowdfunding for businesses. Examples of investment apps and Robo-Advisors are Robinhood, SoFi, T.D. Ameritrade, etc.
Personal Financial Management Apps
Personal financial management apps act like financial advisors. They provide financial solutions for customers on the app to help them manage their money. Personal Financial Management apps ensure that users are free to choose the financial plan that suits them. It is easier for customers to track their expenditures and centralise their cash flow through these apps. Many smartphone users use this type of fintech app to manage their business, build a saving habit, and make sound monetary decisions. Examples of this type of app are Mint, Spendee, etc.
Tax Filing and Management Apps
Taxes are one of the complicated aspects of finance in developed, developing, and underdeveloped nations. A tax filing and management app was created to solve the grey areas in taxes.
The function of this app is to simplify what taxes are to the general populace, enhance tax payment, and manage tax payment processes. Tax filling and management apps have these benefits. To create:
1. tax payment awareness for citizens.
2. Simplify the complex tax payment process.
3. Serve as a platform to generate taxes for the government.
4. Ensure tax management for taxpayers.
Apps like Intuit Turbotax and Credit Karma Tax provide these services and make it easy for users to track their tax payments, correct tax mistakes, and provide a tax return if they overpaid.
Knowing this detailed information about the fintech app allows you to make a wise financial decision. They also ease the difficulty of visiting financial institutions’ offices for every financial service. For tech startups who want to create a fintech app, I believe this article will be a masterpiece for you. Feel free to subscribe to our newsletters.