Fintech applications are enjoying quick growth with the time spent by users on business and finance apps growing 30% a year. Currently, they constitute almost 10% of all available applications in Apple AppStore and this trend is growing as the interests in this branch reaches its peak. After all, fintech is one of the hottest topics in business magazines and during finance conferences, attracting both future startup owners, investors, and regular banks.
And with a good reason. Making finance management easy and intuitive for everyday users, this type of apps is predicted to reach over 2 billion users by 2020 – a quarter of world’s population. A good niche to start with your own, profitable app, isn’t it?
But before you come up with your own fintech app idea, let’s bring closer the basic terms and data connected with it and show trends that will rule this market niche in the next years.
WHAT IS FINTECH?
Being a common buzzword, fintech is sometimes perceived very differently.
The term ‘fintech’ (or FinTech) is an abbreviation of ‘financial technology’ and it means a new technology or innovation that aims to compete with traditional financial methods in the delivery of financial services.
Financial institutions sometimes understand this term broader – as the backend of their businesses. Therefore, regular bank apps, which started to emerge after some first successes of non-banking fintech mobile applications, are sometimes included in this term.
Generally speaking, fintech industry contains such services as money transfers, mobile payments, loans, fundraising, asset management, and many others.
FINTECH VS BANK APPS
The fintech app industry can be divided into two general sectors. The first includes original fintech applications which were created by entrepreneurs unrelated to big financial institutions. The aim of such apps is to facilitate the process of money transfers, omitting the bureaucracy of banks. The second group includes bank mobile applications which were created by huge financial institutions as an answer to the challenge fintech apps posed to them.
As SensorTower notices, although bank apps took off quickly in 2015, supported by their mother financial institutions’ investments, they are currently losing their dominance. The fintech market is developing extremely quickly and non-bank personal finance apps are starting to dominate the scene, getting 7 million downloads in U.S. App Store and Google Play.
The top finance startups, from Venmo to Robinhood to Acorns, still beat the top retail banks in user reviews, too. 10 top finance startups scored an average 4.2-star review, according to AppAnnie research, as opposed to the 3.6 by the retail banks.
TYPES OF FINTECH APPLICATIONS
Fintech apps are very diverse, ranging from mobile payments to budgeting to managing cryptocurrencies. As the research by SensorTower shows, the most popular categories include payments, credit monitoring, investment, and budgeting – growing at the pace of even 80-90%.
So what are the basic types of fintech apps by their function? Here are the most important ones – with examples of successful app projects:
- Processing Payments – e.g. PayPal, Due.com, iZettle, Mobikwik
- Personal Loans – LendUp, Sofi
- Automated Investing – Wealthfront, Betterment
- Operations with Cryptocurrency – Blockchain, Bitcoin Wallet
- Credit monitoring – Credit Karma, Credit Sesame
- Budgeting – PocketGuard, Wally
THE FUTURE OF FINTECH APPS
In which direction will fintech branch go in the future? That’s the question everybody in the finance industry is asking themselves. Predictions differ but these 5 trends are the best bets.
1. API integration
Huge finance companies and banks have already not only noticed that mobile is the future of finance and copied some of the fintech solutions but also started to invest is some finance startups. They are interested in startups which create tools for other companies to use when building financial products but not the end product itself.
Fraud, compliance, core banking infrastructure; “all the systems which are very aged and banks really do need help with”– Rebecca Lynn, Canvas Partners’ cofounder and general partner
sums up banks’ needs in the fintech app market
2. More mobile transactions
It is expected that in 2017, approximately a quarter of the US adult smartphone users will be using P2P payment app once in a month. By 2020 also mobile payments will peak, reaching the volume of $503 billion.
This will enable both retailers and payment providers to allow smoother transactions for purchases and create a big niche for such fintech apps – as long as they can grow quick enough to outrun competitors.
3. Biometric security
Security is the key in mobile applications, especially fintech ones, where huge amounts of money are often transferred.
As the innovational security measures such as fingerprint recognition, face recognition, and iris scan are coming to the market, the biometric information will very likely be used in order to accomplish the payment transactions soon – even within a year or two.
Interested in fintech mobile applications? Check also everything you need to know about mobile payments