What is fintech?

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Monzo, Nutmeg and Revolut are all examples of fintech companies that use technology to improve their financial services. But what is fintech, and what does it mean for your money? Here we explain it all.
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Fintech is the shortened version of financial technology. It describes technology businesses that compete with more traditional financial organisations, such as banks.

The term was often used to describe the operating systems behind financial institutions such as banks or building societies. Now, it's starting to represent companies that are disrupting traditional financial services. This includes mobile payments, transfers, loans, fundraising and investing.

What are some examples of fintech?

Monzo: This is one of the best known digital-only banks in the UK. Digital-only means it doesn't have a high street presence. It won customers’ attention because it gave real-time updates when they spent money. And the bright pink card helped too.


Bitcoin: This is a form of cryptocurrency launched in 2009. It's different to money issued by a country's government because an independent authority issues it. There are no physical bitcoins, and it's not legal tender. But it has triggered the launch of other virtual currencies.


Zopa: Launched in 2005, this was the first peer-to-peer lending company. These platforms let individuals loan each other money without a bank. Regulated by the Financial Conduct Authority, Prudential Regulation Authority (PRA), and the Peer-to-Peer Finance Association, Zopa launched a bank in December 2018.

Where did fintech companies come from?

The financial crash of 2008 changed the way a lot of us felt about money. Consumer money was lost, and banks have spent years trying to rebuild trust. It's a perfect climate for new, smaller financial companies to offer something different.


These providers offer products like traditional banks, but they don't have physical branches. With fewer staff members, overheads and old systems, they can roll out new services faster.

The FCA regulates all fintech banks with a current account. They will also be part of the Financial Service Compensation Scheme (FSCS), which protects your money up to £85,000 if the firm goes bust.

What does this mean for your money?

Fintech companies want to make managing your money easier and faster. This means their services will often be more accessible compared to older institutions. Technology will continue to improve, and financial companies will want to adapt, with fintech providers likely leading the way.


