The digital age is blazing a path for the fintech niche. It should not be a surprise that investing apps like Robin Hood and Acorns are booming. After all, the tech-savvy millennial generation has come of age. They are making money, and they are investing it. And one thing is for sure─the stuffy suits and outdated banking models just won’t do.
In fact, when it comes to finance, there seems to be an app for everything from getting a loan to trading stocks. Let’s take a look at a round-up of fintech startup companies that you need to keep your eye on.
Financial Technology (Fintech) is a collection of companies that utilize the latest technologies to disrupt traditional financial services. In most cases, these startups directly compete with existing financial institutions, offering a new way to do the same things. The novelty and accessibility seem to attract droves of customers, which help make these startups suitable investments.
The term fintech first popped up around 2010─and today; it’s a whole industry. Fintech covers innovative services in investments, banking, financial literacy, insurance, and cryptocurrencies. While the term fintech was first used to describe the computer technology driving banking, today, it represents a new wave of financial services built on the tech-savvy business model.
For decades the financial world has been stagnant. Banks, mortgage companies, and insurance providers have been slow to adopt new technologies. But further growth in the Fintech sector is forcing their hand. Chase bank was one of the first traditional banks to launch a mobile payment solution. In the coming years, the older companies will adapt to meet the demands of consumer growth or become obsolete.
Popular Fintech Startups Getting Attention in 2021
From effortless savings to mobile banking and simple insurance transactions, technology is changing the game for how consumers spend, invest, and save money. While many of these companies have been around for a few years, many are gaining attention for new services, and many more have recently risen to fame.
Digit is a San Francisco, CA-based company that is in business to make saving and investing more accessible. It is an app that moves small amounts of money into user-specified savings categories based on individual spending patterns. Digit is suitable for automating savings, paying down debt effortlessly, and setting up financial safeguards. However, it does come with some risks by allowing a third party to access your banking accounts, and there is a $5 monthly service fee.
Robinhood has been making big waves lately by disrupting the investment world. It is a commission-free investing app designed to make investing more accessible. That means there are no minimum account balances and no special status requirements. For the first time, small investors can get a fair shot at the market. Despite the apparent benefit of accessibility, Robinhood offers virtually no customer support either by phone or live chat.
Chime is changing the game of mobile banking. The company appeals to a broader audience by offering optional early payday loans with direct deposit. Chime offers a no-fee and automatic savings account models with no limits. The most significant drawbacks of a Chime account or limited access to cash deposits, various service fees, and out-of-network ATM charges.
Riskified is an e-commerce software that helps protects online businesses from fraudulent transactions. Riskified helps weed out potential fraud from legitimate shoppers while simultaneously offering a more robust checkout experience for verified transactions.
Pitchbook is a Seattle-based company offering a private-equity database so that you can have real-time stock market data available on your desktop or mobile device. Through access to the data that matters, investors can gain insight into trends and actionable purchases to reach their financial goals. The data that pitchbook provides helps clients nail pitches, effectively fundraise for campaigns, grow their business, and make exceptional deals.
Pitchbook offers a comprehensive database with a user-friendly interface. On the downside, there seems to be some lag in updating financials on the platform, and some of the AI features are still clunky.
Kraken is a San Francisco-based cryptocurrency exchange platform that is leading European markets and comes in second only to Coinbase in the US. In September 2020, the platform became the first cryptocurrency firm to receive a banking charter─opening the door to new possibilities.
Hippo is using AI to change the game for the insurance world. By pulling data from satellites, public databases, and customer habits, among other sources, the app streamlines buying and selling insurance products, filing claims, and more.
Monzo is a European mobile-only banking company. Monzo makes it easy to spend, save, and manage your money from a convenient mobile app. The app gives the user complete flexibility over their savings by allowing them to organize their money into pots for different purposes. Plus, they make it easy to travel around the world with your money. Monzo does not add any transaction fees to currency exchanges. Monzo also makes it easier to split bills with friends and many more features.
Braintree is a backend online payment system that allows the e-commerce world to accept payments through Paypal, Venmo, credit, debit, and digital (Apple Pay and Google). Braintree is under the Paypal umbrella, a well-known brand in the fintech industry. And they extend the same level of white-glove service to their customers, making Braintree a premier choice for many e-commerce retailers.
Originally a payment processor for e-commerce, Square is making a move into mobile banking with a launch planned by the end of 2021. Square now offers both e-commerce and point-of-sale payment options for businesses of all kinds, making it a solid contender for the well-established Paypal.
Remitly is an international funds transfer solution to send money to friends and family around the world. They promote a simple platform with low fees that allow users to perform bank deposits, cash pickups, mobile money, and home delivery.
Roost combines innovative home technology with the insurance industry to offer smart, real-world services for residential and commercial properties. Some of the key benefits include efficiency in process claims for faster payouts and better customer engagement. It is smart for property owners and smart for insurance providers.
Lemonade is another fintech startup that is shaking up the insurance industry. You can get any kind of insurance that you need, from affordable renters policies to pet and term life insurance. They focus on fast and affordable to take the typical hassle out of a frustrating system.
Crowdfunding has revolutionized everything from real estate to investing and savings. The insurance industry is no different. Teambrella uses peer-to-peer coverage to solve the natural conflict between insurance companies and policyholders. The companies technology is built on blockchain for sustainable security and uses a voting mechanism to maintain mutual control.
Spring Labs is a backend data security venture that bridges the communication gap between companies to reduce liabilities. It is used primarily by lenders who need to evaluate the creditworthiness of borrowers to make lightning-fast lending decisions.
BlueVine is a business investing and funding startup catering to small businesses. With a full range of services, BlueVine helps businesses with everyday services to manage their cash flow. Innovative services include business checking, lines of credit, invoicing, and other financial services.
Atom Bank is reimagining banking in the UK. They undid the archaic brick-and-mortar banking model in favor of an app-based bank. They offer specific services like savings and mortgage lending, but they meet customers where they are on their smartphones. With lower overhead, they can pass significant savings and fewer fees on to their customers.
Klarna is a financing app for modern e-commerce. They allow buyers to break everyday purchases up into installments. Klarna comes in app form so you can shop online and in-store. Shoppers enjoy the convenience of flexible financing while earning rewards.
Toast is a point of sale system for the foodservice industry. One system integrates business recordkeeping and inventory, customer payments, and workflow processes to run a better business. Toast offers scalable solutions for every size of business.
Revolut bills itself as the UK’s fastest-growing financial super app. Users can exchange, send, and receive money. Revolut offers a wide range of services to match modern consumers’ needs. The app is packed with budgeting tools, currency conversions between cash and crypto, free accounts, global and cross-border transfers, money tools for kids, and the ability to split checks.
The fintech sector in 2021 is disrupting how traditional financial businesses operate. Keep an eye on these fast-growing fintech startups.
Plum Fintech Limited
Plum Fintech Limited develops a mobile app used for investments and personal savings. The platform is most known for offering customized investment recommendations to its users. Currently, this fintech startup offers three paid plans that range from £1 to £4.99 each month and one limited free plan. The founder, Victor Trokoudes, claims that Plum Fintech has over 650,000 users.
The fintech platform Fundallprovides businesses and individuals with a variety of investment tools. Its app offers users spending analytics to inform them of their predominant financial habits. This platform is in an active beta stage and currently has over 10,000 active users.
SportTrade is an increasingly popular sports betting platform that also has a trading exchange where users can trade sports bets like stocks. It’s an unconventional take on the traditional sports betting model that takes after the modern financial market. SportTrade is a fintech solution backed by nine significant investors.
The fintech platform TreasurySpring operates in the wholesale of money markets. More specifically, the software aims to minimize risks and maximize returns by using fixed-term funds (or FTFs). This startup currently offers corporate, financial, and sovereign FTFs.
Figure is a financial service that’s powered by blockchain, and it’s used for both business and personal matters. This fintech startup offers financial products that are related to home equity, mortgages, and personal loans for individuals. For institutions, it offers features that help with cap table management, asset management, and marketplace services.
Stockal is a fintech platform that started out as a stock advisory firm that provided research to investors. Initially, the startup struggled with monetizing its product, but in 2018, Stockal shifted into a digital infrastructure organization. Its new goal is to help retail investors abroad invest in international markets, like the United States. The fintech company currently serves India, and it plans to expand into Southeast Asia and the Middle East relatively soon.
Gohenry is a fintech money management platform that focuses on teaching young people how to better handle their finances. With the app, children get to physically handle their money with debit cards that are controlled and prepaid by their parents. The startup reports that Gohenry has over 1,000,000 paying customers.
Bluesheets is a fintech bookkeeping automation platform that uses AI assisted by humans to update financial ledgers, extract data, and generate analytics and reports. The goal for this fintech startup is to reduce and eliminate accounting errors and the time that in-house teams spend on bookkeeping work.
The fintech platform Trueaccord is a machine learning solution that works on debt collection. More specifically, it uses a “HeartBeat” algorithm that is engineered to automatically improve a company’s debt collection success rate.
Stripe is a fintech platform that quickly became one of the fastest-growing startups in the world. The payment processing platform sees use on almost 2 million different websites. Its users range from other small startups to the biggest enterprise brands.
BharatPe is a fintech startup company based in India. It offers an integrative payment processing platform used by merchants worldwide. In addition, BharatPe offers business loans and POS systems. Currently, they have over six million customers and a $900 million valuation.
Wise (previously TransferWise) began as a money transfer service. The app allowed users to send money internationally without high exchange rates or hidden charges. Now, the fintech startup has grown to make a cheaper and faster borderless banking solution, which is why they changed the name to Wise, emphasizing the broader platform.
Based in Brazil, RecargaPay is a fintech startup that offers a seamless mobile payment wallet to its users. Targeted at people in Brazil without bank accounts, users can use RecargaPay to top off prepaid phones, transfer money, pay bills, buy gift cards, and more.
Rapyd is a fintech platform that offers a payment gateway that focuses on international payments. Its main attraction is helping e-commerce businesses achieve easy localization. Rapyd’s most well-known customers include Ikea and HotMart.
Creditas, like RecargaPay, is based in Brazil. This fintech platform works with digital consumer loans. It uses a credit score system to allow users to use their homes and vehicles for collateral against a loan. It was originally named BankFacil before the company rebranded to Creditas.
Chipper Cash is a fintech startup specializing in cash transfer. It allows users to send free personal payments like Venmo and Cash App. The company primarily operates in Kenya, Ghana, and Nigeria, even though the business is based in SF, California.
Nubank is a neobank that offers its users credit cards, personal loans, digital bank accounts, and cashback rewards. The fintech startup currently serves over 34 million users in Brazil with its financial services.
Vivid Money is a mobile banking and financial platform. It offers reporting features, multi-currency access, and high-interest savings accounts, among other services. Most recently, Vivid Money expanded its platform to include brokerage capabilities, allowing its users to buy and sell ETFs and stocks. The platform also offers cashback options to store and spend money within the app.
Razorpay is a fintech payment gateway suite. The startup offers dozens of products, including virtual accounts, checkout page tools, and automated vendor solutions. With a billion-dollar valuation, Razorpay is one of the rare fintech unicorns.
GoCardless is also a payment gateway, but it focuses on recurring transactions. Unlike many competitors, it offers recurring payments via debit cards and ACH. The fintech startup has many prominent customers, including DocuSign, Deloitte, and SurveyMonkey.
Varo Money is a neobank that advertises itself as being extremely user-friendly. Other than typical neobank features like no credit checks or overdraft fees, Varo Money also offers saving accounts with much higher interest rates than most traditional banks and financial institutions.
The Future of Fintech Investments
We are not sure if it is the volatility of markets amid the COVID-19 pandemic or a true change in the tides. However, it appears that investors are shying away from newer fintech startups in favor of slightly more established fintech investments. In the first half of 2020, fintech investments dropped by almost 39% compared to the same period the previous year.
In fact, more than $1.8 billion went to the top five investments, with smaller shares going to all other fintech startups. The good news is that the coronavirus pandemic has sped things up for the fintech niche. More consumers are demanding digitization of their money in the interest of public health.
Fintech is driving change in the banking sector through the growth of challenger banks. These small to medium-sized institutions bring more diversity to the market. They first popped up following the 2008 financial crisis and have since really found their foothold in the UK market. New niche and community-focused banks are also paving the way for a new era of banking, specifically online and app-based banking. Meanwhile, the existing large branch banks will continue to work towards digitizing their services.
Consumers will move towards the widespread adoption of digital wallets. This digitization will enable real-time transactions and cross-border payments, making older services for processing payments and transferring money obsolete.
More peer-to-peer lending options will become available as consumers choose to turn away from traditional lenders and work within systems that offer more control and more transparency. And at the same time that consumers are moving away from traditional lines of credit, a new era of lending has come to light. Almost everywhere you shop, there are options for buy now and pay later or installment payments. These options are expected to continue to grow.
Wealth Management & Capital Markets
Investments are also seeing their own revolution in the digital age. Apps like Robinhood are removing barriers to traditional investments. We can expect to see more disruptive change that helps new populations build wealth and financial literacy.
Other Trends to Watch
Across all segments of the Fintech industry, there are some common themes to be on the lookout for. This tends to include autonomous finance, blockchain integration, artificial intelligence, and an increasing co-dependence between the tech world and the finance world. Consumers are already enjoying many of these trends. Apps like Digit and Acorns help individuals automate savings using artificial intelligence to make saving simple and effortless. We are also seeing big Tech names like Apple and Google embracing a transition into the world of finance.
Technology is changing the future of finance. From app banking to non-traditional lending sources and new ways to get insurance, these new startups are shaking things up for the well-established companies in these niches. The big names like Chase Bank, Wells Fargo, and State Farm will have to pick up some steam in order to compete. Millennials now make up the most significant section of consumers. Between them and every generation thereafter, technology comes naturally as an integrated way of life.