Fintech, a Diverse Landscape of Companies

The term “Fintech” (a combination of the words finance and technology) refers to technological innovation applied to financial services, regardless of the nature or size of the company providing them.

The use of technological innovation in the financial sector is not a new phenomenon, but the volume of investment and the pace of innovation have grown substantially in recent years. Among other things, technological innovation is driving the use of the potential of social networks (P2P), artificial intelligence, machine learning, mobile applications, DLT technologies, cloud computing, and the use of Big Data… All of this is generating new services and business models offered by traditional financial institutions, as well as by major technology companies and new entrants.

Although Fintech is often identified with “startups” expert in new technologies that wish to intervene in one or more parts of financial intermediation services, the term Fintech encompasses all companies that use innovation in information and communication technologies to offer new financial products and services, or to better adapt them to their clients’ needs.

There are many types of Fintech companies. To begin with, there are companies that do not seek to compete directly in the provision of financial services, but rather are solely technology developers for established companies, generating increased competitiveness and efficiency (e.g., RegTech companies). There are also new competitors that introduce new ways of interacting with customers in traditional banking channels (e.g., new peer-to-peer platforms).

Here are some examples of Fintech by category:

1. Credit, Deposits, and Capital Raising Services

Crowdfunding: platforms that facilitate obtaining financing for companies or individuals through collective contributions. Several types exist:

• Reward-based crowdfunding: platforms that facilitate obtaining financing for the development of new projects. This financing is obtained from individuals who receive a reward in exchange for their contributions. Rewards vary widely, from a simple thank you to the delivery of a limited edition product. For example, Verkami.
• Equity-based crowdfunding: platforms that facilitate companies in obtaining financing by offering a share or stake in the company or a commitment to its profits as a reward for the contribution received. For example, The Crowd Angel, which facilitates financing for startups, or La Bolsa Social, which facilitates financing for companies seeking to produce a positive impact on society and the environment.
• Crowdlending: financing platforms through which a group of investors makes a collective loan to a company or individual in exchange for a return. For example, MytripleA for financing companies and Zank for individuals.
• Donation-based crowdfunding: online tools aimed at raising funds to finance solidarity projects. In this case, there is no consideration for the fund donors. For example, Teaming.

Alternative Lending: companies that lend their money to businesses or individuals. Types:

For Individuals

• Personal loans and credits: platforms through which individuals can apply for quick loans. For example, Monedo Now.
• Micro-loans: solutions that offer quick loans to individuals with a maximum amount of 900 euros. For example, Savso.
• Technological deferred payment services for customers: platforms that offer instant credit to online store customers, allowing them to pay in installments. For example, Aplazame.

For Businesses

• Lending for businesses: platforms that offer credit lines to companies for a maximum amount of 100,000 euros with a repayment period of up to 12 months. For example, Spotcap.

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