Classifying FinTech Apps for Beginners
FinTech is a huge umbrella that includes several different products both physical and digital. One of the most identifiable types of FinTech is phone apps. Nowadays it is hard to find someone without a SmartPhone. Android and iPhone users can both agree “There’s an app for that”.
To clear up some confusion I have a whole video breaking down the 8 types of apps. HERE
Let’s go in-depth about the 8 basic types of FinTech Apps:
There are some neo (new) ways to bank nowadays. Instead of traditional brick and mortar, online banks are able to give better perks and interest rates because they don’t have extra bills associated with having a physical location.
Some examples of online banks are:
These are the apps provided by your traditional banks. Most banks will have phone apps in addition to the ability to walk into a physical location. Their apps will give you the power to check your account standing at any time, view account details, and promotions.
Financial literacy is an important topic and many people struggle to find information that they can relate to. Queue in the Financial Literacy Apps! Each platform will be different but the goal is to get their end-user financially literate. There are some platforms targeted to children and young adults and there are others focused on adults in various stages of life.
Some examples of financial literacy apps are:
There are two different types of investing apps. Robo-investors are those platforms that do the work for you. They can be compared to a mutual fund or index fund. The service will invest your money for you based on your investor preferences (Aggressive vs Conservative). Manual investing platforms or E-traders are more hands-on. You are choosing your own trades, unlike Robo-investors.
Some examples of investing apps are:
This is your virtual interactive budget in your pocket. Budgeting apps help create a budget by using your credit card data transactions. They often will show you where your spending is going and have reminders and alerts if you are going over your allotment for specific categories.
Some examples of budgeting & savings apps are:
Money exchange apps are saving everyone from that awkard “I don’t have any cash” conversation when you're out with friends. Peer-to-peer exchanges are used for sending money to others that have different banks. There may be a small fee associated with the exchange depending on how quickly you want the funds deposited.
Some examples of peer-to-peer exchanges are:
This is different from peer exchanges. While some virtual payment apps can also be used for peer sharing, virtual payments are meant to create a cashless and cardless currency exchange. These platforms can be used for online and in-person transactions.
Some examples of virtual payments are:
Cryptocurrency is the future, whether you like it or not! Crypto is a whole other can of worms and can get complex when trying to understand how it works. Crypto exchange platforms give traders the ability to buy and sell different cryptocurrencies like Bitcoin and Ethereum.
Some examples of cryptocurrency exchanges are:
Don’t get too picky about which category a specific app falls into. The truth is as these companies get bigger and scale larger they will end up providing multiple services.
It’s not unusual for an investing app to offer a savings account or for an online bank to also help with budgeting. The main idea of the app is usually how I classify them. For example, Paypal was created as a virtual payment system, but you can also send funds to a friend with the app as well.