WHAT IS: Fintech?

You’ve probably heard the word "fintech" tossed around a lot. Maybe even used it in a conversation yourself. But have you ever actually stopped to think about what it really means?

If you’ve sent money using PayPal, bought Bitcoin, or used an app to budget your spending, you’ve already experienced fintech in action. It is how technology has come to define how we interact with money. We have come a long way from every financial transaction involving a visit to the bank. tellers and cheque

While the term itself isn’t brand new, its use has exploded, growing 25-fold in the past decade, according to Michigan Technological University. The financial industry has always evolved with tech, but the internet and mobile devices have massively accelerated the pace. Today, anyone with a smartphone can move money, get a loan, invest, or even trade stocks in real time. No bank branch needed.

As adoption grows, the industry has ballooned, and the numbers show just how big this has become. The global fintech market is estimated to be worth $209.7 billion in 2024 and is on track to surpass $644 billion by 2029, according to Exploding Economics. While that’s still just a slice of the broader financial sector, estimated at $33 trillion globally in 2024, fintech is gaining ground fast. In fact, fintech companies are now growing twice as fast as traditional financial firms, per the BCG Global Fintech Report 2025.

What Is Fintech?

The word "Fintech" is a combination of two words: "Financial" and "Technology." It is the use of technology to make financial services more accessible, faster, and often cheaper.

In the early 2000s, fintech mostly worked behind the scenes, powering the backend technology for financial institutions. But today, fintech has expanded into more consumer-centric services, providing digital solutions directly from your smartphone or your PC.

This technology is usually in the form of apps or platforms that leverage cutting-edge software algorithms, data analytics, AI, and cloud computing to make money management simpler, more efficient, and often cheaper for businesses, entrepreneurs, and consumers.

These platforms are usually provided by digital-only banks (often called neobanks and even fintech companies themselves). They offer everything from checking accounts, savings tools, and even credit products, without the baggage of physical branches or legacy systems.

What Makes a Company Fintech?

A fintech company is any business using technology to deliver financial services, or better, faster, and more accessible. According to McKinsey, they are companies that rely primarily on technology and cloud services, and less so on physical locations, to provide financial services to customers.

Their service can be tailored to different use cases. Some build tools for consumers directly, employing a B2C model. Others work behind the curtain to power the tech used by banks and other institutions, which is a B2B model. These companies have essentially reimagined banking without physical branches. Fintechs include start-ups, growth companies, banks, nonbank financial institutions, and even cross-sector firms.

Why Fintech is Relevant

Fintech provides a kind of access that mortar-and-brick banks never will. Its real power is in its ability to democratize finance, breaking down the walls that once kept people from participating in the financial system. It brings financial tools directly to your pocket, allowing the underserved populations, the underbanked and unbanked, to tap into the possibilities it offers.

Today, you can open a bank account on your phone, verify your identity digitally, and begin managing your finances, or get loans without needing to step into a building. You can even track your spending in real-time, get alerts when you’re off budget, or receive automated tips on how to improve your financial health

Most importantly, fintech gives you a choice. It’s often faster and often cheaper than the alternative.

How Fintech Actually Works

The way fintech works is by digitising the traditional processes of financial services and delivering them through user-friendly digital platforms like your smartphone or other forms of mobile devices.

So, rather than visiting a bank branch or calling a broker, you can interact with an intuitive mobile or web interface. Behind that interface, data is shared securely between banks, payment processors, financial databases, and AI tools using APIs to perform actions like transferring money, checking balances, analysing spending habits, or approving loans in real-time.

Each time you tap “send” or “invest,” fintech kicks off a series of automated back-end processes. Your input is authenticated, and your financial data is accessed. These computations or checks are run in real time, and the results are returned to you in seconds. It is a whole process that happens invisibly in the background, powered by a well-orchestrated digital infrastructure.

Here are the core technologies and systems that make this possible:

• APIs (Application Programming Interfaces): These are like translators. APIs act as a connection between fintech apps and financial institutions. They enable apps to request account information, authorise payments, or verify identities in real time.
• Cloud Infrastructure: Hosting platforms in the cloud give fintech companies flexibility and speed. With this infrastructure, fintechs can scale easily to serve millions of users, store data securely, and deploy updates instantly without relying on physical hardware.
• Data Analytics: Every transaction or click generates data. Fintech uses this data to deliver insights, detect suspicious activity, predict behaviour, and offer tailored financial advice or products.
• Machine Learning and AI: These technologies allow fintech systems to learn from user behaviour. AI helps detect fraud patterns, automate customer support, approve loan applications, and personalise financial recommendations.
• Encryption and Cybersecurity Protocols: Strong security measures protect financial data during transmission and storage. Fintech apps use encryption, tokenisation, and multi-factor authentication to guard against fraud and breaches.
• Mobile and Web Interfaces: This is where users interact with fintech. These interfaces are designed for speed, simplicity, and accessibility, allowing people to manage finances quickly and intuitively.

When these components work together, they allow fintech platforms to deliver financial services that feel seamless and immediate, even though they’re supported by highly complex digital systems.

Types of Fintech Products

Fintech covers a wide range of services, but those fintech products can be grouped into key categories based on what they help people or businesses do.

1. Digital Banks (Neobanks): These are fully online banks with no physical branches that offer checking and savings accounts, debit cards, and early paycheck access, all with low or no fees. Their apps are designed to be intuitive and user-friendly, appealing especially to younger, mobile-first customers. Examples are like Chime, Varo, Opay, and Revolut.
2. Payment apps: These are the major drivers of the cashless economy. These digital payment apps like Venmo, Zelle, Apple Pay, and Google Pay make it effortless to pay friends, split bills, or buy things online without using physical cash.
3. Personal finance apps: These apps help users see all their accounts in one place, track spending, and find ways to save. Examples are fintech apps like Mint, YNAB (You Need A Budget), and Rocket Money
4. Investment platforms: These platforms give everyone a chance to grow their money by buying stocks or crypto on their phone (e.g., Robinhood, Coinbase).
5. Crypto wallets: allow instant global transactions with digital currencies.
6. Lenders: Apps like SoFi, Affirm, and Upstart offer instant loans or buy-now-pay-later options, often with better terms than traditional banks. They analyse alternative data — like your income flow — instead of just your credit score, making credit accessible to more people.
7. Embedded finance: This is when a non-financial company offers financial products. For example, Amazon gives small business loans. Shopify offers checking accounts to sellers. Uber drivers can cash out instantly using Uber’s debit cards. These financial tools are baked directly into other services.

Real-World Examples of Fintech

• Venmo / Cash App / Stripe  – Person-to-person (P2P) payments
• Robinhood / Acorns / Bamboo– Stock and micro-investing
• Chime / Revolut / Opay / Nubank / Tymebank – Digital banking (neobanks)
• Coinbase / Binance / Crypto.com – Cryptocurrency trading
• Lemonade / Root Insurance – Digital insurance platforms
• Klarna / Affirm / CredPal / LazyPay – Buy-now-pay-later services
• PayPal / Stripe / Square – Online payments and business transactions
• Mint / YNAB / Copilot – Budgeting and personal finance tools

Benefits of Fintech

1. 24/7 Access: Fintech apps let users manage money anytime, anywhere. There’s no need to wait for business hours or visit a branch.
2. Lower Costs: Many fintech platforms operate with fewer overheads than traditional banks, allowing them to offer cheaper fees, better interest rates, or no fees at all.
3. Increased Financial Inclusion: People who’ve been shut out of traditional banking — due to geography, credit history, or income — can now access services from their phone.
4. Faster Transactions: Whether sending money, applying for loans, or investing, fintech processes are usually quicker than those of legacy systems.
5. Personalised Experiences: Fintech apps tailor insights, alerts, and recommendations based on your financial behaviour and goals.
6. Better Tools for Businesses: Small businesses benefit from faster payments, simplified accounting, and easier access to credit, thanks to platforms like Stripe, QuickBooks, and Wave.

Challenges of Fintech

1. Data Privacy Risks: With so much sensitive data being collected, there’s a constant threat of data breaches, leaks, or misuse.
2. Regulatory Uncertainty: Laws and regulations are often two steps behind the pace of fintech innovation, especially around crypto and digital lending.
3. Cybersecurity Threats: Fintech companies are frequent targets for hackers. Keeping systems secure is a constant challenge.
4. Digital Divide: Not everyone is comfortable or familiar with using digital tools, potentially leaving behind older or less tech-savvy users.
5. Dependence on Technology: Outages, bugs, or server issues can block users from accessing their money or completing transactions.
6. Lack of Physical Presence: Some consumers still value in-person support, which most fintech services don’t provide.

What’s Next?

Fintech has already transformed how we handle money. But this is just the beginning. With AI, blockchain, and other tech entering the mix, expect smarter, faster, and more personalised financial services in the years ahead.

AI specifically, will transform financial technology into a more seamless system. Fintech platforms will now be able to personalise services based on your financial habits, helping you make smarter choices and putting control in your hands.

Whether you're splitting dinner, building credit, launching a business, or planning for retirement, fintech is quietly reshaping your financial life.

So the next time you tap your phone to pay or check your investment portfolio over breakfast, remember: that’s fintech at work.