The Rise of Fintech: How Have New Technologies Changed the Face of Finance?

Just as the Internet changed music and media forever, so technological innovations have revolutionized the finance sector. Once a stagnant industry monopolized by banking powerhouses, finance was ripe for the innovation, growth, and change created by fintech.

In this article, we look at the sudden growth of fintech companies, identifying the different types, and the potential of fintech to change the world of finance forever.

What Is Fintech?

Fintech is a term applied to firms in the finance sector that utilize modern technology to cultivate innovative, pioneering financial services and products. The term is a portmanteau of the words “finance” and “technology.” Although it is a relatively recent term, fintech is far from a fad. It is here to stay.

Leading financial institutions are worried about fintech—not so much the relatively modest market share fintechs currently command, but their potential to unseat the world’s biggest banks in the future. Fintech is changing the finance sector, and fintech companies are already having a considerable impact on the way that both businesses and private clients conduct their financial affairs.

Global investment in fintech tripled between 2008 and 2018, rising from $928 million to $2.97 billion. With fintech becoming an increasingly attractive investment option for venture capitalists, the sector has stratospheric growth potential.

What Are the Main Types of Fintech?

Fintech comes in a variety of different formats, including:


Digital currencies secured by cryptography, making them virtually impossible to double-spend or counterfeit. The world’s first major cryptocurrency was Bitcoin. Cryptocurrencies are not usually issued by a central authority, placing them beyond the reach of government manipulation or interference.



The lynchpin of many cryptocurrencies, blockchain is essentially a public ledger that records an individual’s online transactions. Information saved on the ledger is shared across a network and cannot be altered or deleted.

Digital Banks

Bricks and mortar banking branches are rapidly becoming obsolete, with more and more individuals and businesses transitioning to online banking. Digital banks exist purely online, enabling customers to open online checking and savings accounts, helping clients to complete deposits, transfers, and withdrawals.


One of the newest types of fintech, insurtech companies provide customers with convenient, competitively priced services via accessible, flexible apps.


Paying for goods and services has never been easier. Online payment apps eliminate the exorbitant fees associated with traditional banking services like international money transfers. Whereas some banks charge up to 8 percent in fees for these services, fintech offers faster, more economical options.

Alternative Financing

Probably the largest category of fintech today, alternative financing encompasses rewards-based financing, equity-based financing, donation-based financing, and debt-based financing.

Enterprise Software

This fintech subsector includes services such as cloud-based point of sale and software-as-a-service, two cloud-based services that can be accessed 24/7 from anywhere.


A form of fintech that relies on apps and software to help people and businesses to comply with constantly changing, market specific regulations. This type of fintech can also help businesses to mitigate and combat financial crime through fraud detection and cybersecurity.


Built for beginner investors to help with risk and investment management, examples include Acorns, Personal Capital, Wealthfront, and Betterment.


AI, machine learning, digitalized tax platforms, cloud computing, and other technological advancements have helped to automate accounting operations and make them more transparent.


A subsector that leverages technological advancements to reduce the costs associated with international trade, facilitating trade finance and increasing transparency in trading operations.

The range of fintech applications is diverse and continually growing, with massive advancements in several subsectors, notably blockchain, digital banking, and insurtech. The fintech industry is constantly evolving, growing ever more efficient and effective, integrating a variety of financial products and services across many financial sectors, reaching out to an ever-increasing number of consumers to satisfy their changing needs.

Fintechs have continued to disrupt traditional banking, presenting new, innovative concepts which are having an increasingly significant impact on global finance and the way that people and businesses conduct their financial affairs.

Ever since the 2008 Global Financial Crisis, fintechs have continued to spring up all over the world, gaining popularity for a number of reasons, some of the most common being distrust of financial institutions following the banking crisis and anger at inequities associated with the traditional banking system.

Technological innovations have fundamentally changed our relationship with banking in the same way that the Internet disrupted the music and media industries. Today, people routinely organize their finances via their smartphones, with fintechs delivering cheaper, faster, more convenient services.

With the financial services industry monopolized by big banks for decades with little to no competition, fintech has provided an alternative, often incorporating cheaper rates and more transparent pricing. In order to stay relevant, forward-thinking banks are investing heavily in financial technology, improving their own digital armories and presence, providing clients with a comprehensive range of online services to make banking faster, easier, cheaper, and better.

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