What is fintech, and how does it change the way money moves?
Fintech is the umbrella word for the apps, software and new firms that handle money with technology. Knowing what sits behind the app on your phone tells you who is actually holding your money and which protections apply.
The short answer
Fintech, short for financial technology, means using software and data to deliver financial services such as payments, lending, saving, investing and insurance. It covers start-ups, big tech firms and traditional banks alike. The label describes the technology, not a licence, so protections depend on who actually holds your money.
Key takeaways
- The Financial Stability Board defines fintech as technology-enabled innovation in financial services that creates new business models, products or processes1.
- Fintech is a broad family: payments, digital banking, lending, open banking, insurance, wealth apps and crypto services all sit under the label.
- Many fintech apps are not banks. They often rely on a partner bank or payment firm behind the scenes, and that partner is what decides which protections apply.
- In the U.S., FDIC deposit insurance does not cover the failure of a nonbank company, even if your money ends up at an insured bank5.
- Before you deposit, check who the licensed firm is, what protection applies and how to get your money out.
What does fintech actually mean?
Fintech is short for financial technology. In everyday use it means any service that uses software, data and the internet to do a job that banks, brokers or insurers have traditionally done: sending money, lending, saving, investing or managing risk.
The most widely quoted official definition comes from the Financial Stability Board (FSB), an international body of financial authorities. It describes fintech as technology-enabled innovation in financial services that could lead to new business models, applications, processes or products with a material effect on financial markets, institutions and the services people use1. Two words in that definition matter: innovation, because fintech is about doing something in a new way, and material effect, because regulators care when it starts to change how the system works.
Fintech is not only start-ups. The Bank for International Settlements separates two groups. Fintech firms are set up mainly to provide financial services. Big techs are large technology companies that offer finance as one part of a much wider set of activities2. Picture a large online marketplace or messaging app that adds payments or loans. Traditional banks also build fintech, for example when they launch a mobile app or instant payments.
What are the main types of fintech?
Fintech is easiest to understand as a set of jobs. Each job below has its own explainer on Bitfolio, and most fintech apps combine several of them.
The main fintech categories and what they do
| Category | What it does | Everyday example | Read more |
|---|---|---|---|
| Payments | Moves money between people and businesses | Tapping a card or phone at a till | Card payments |
| Instant transfers | Sends money account to account in seconds | Paying a friend back by phone | Real-time payments |
| Digital banking | Accounts and cards run through an app | An app-only current account | Neobanks |
| Data sharing | Lets you share bank data with other apps, with consent | A budgeting app reading your transactions | Open banking |
| Lending and credit | Loans and pay-later plans decided online | Splitting a purchase into instalments | Buy now, pay later |
| Crypto and tokens | Digital assets recorded on blockchains | Holding a stablecoin in a wallet | Stablecoins |
Behind the scenes there is a second layer of fintech that most people never see: identity checks (KYC and AML), fraud detection, and companies that let non-financial brands offer accounts or loans inside their own apps (embedded finance).
How does a fintech app move your money behind the scenes?
A fintech app is usually the top layer of a stack. The app handles the screen you tap and the customer service. Underneath, a licensed institution holds the money and connects to the payment systems that actually move it. Some fintech firms hold their own banking or payment licence; many partner with one instead.
Figure · The typical fintech stack
- L4App or websitewhat you see and tap
- L3Fintech companydesign, support, risk checks
- L2Licensed institutionbank or payment firm holds funds
- L1Payment railscard networks, transfer systems
This matters for one practical reason: protection follows the licensed institution, not the brand on your screen. The U.S. Federal Deposit Insurance Corporation (FDIC) warns that its deposit insurance does not apply if a nonbank company fails or goes bankrupt. Money placed through a nonbank can sometimes qualify for so-called pass-through coverage, but only if conditions are met, including records that show exactly who owns how much5. Our explainer on neobanks walks through those conditions in detail.
Why do governments and central banks pay so much attention to fintech?
Policy-makers see both promise and risk. In October 2018 the International Monetary Fund and the World Bank Group launched the Bali Fintech Agenda, a set of 12 policy elements meant to help countries capture the benefits of fast-moving financial technology while managing its risks3. Its themes run from financial inclusion and competition to legal frameworks, financial integrity and international cooperation.
Access is part of the picture. The World Bank's Global Findex survey found that 79% of adults worldwide had an account in 2024, and that 84% of adults in low- and middle-income economies owned a mobile phone4.
Figure · What policy-makers weigh up
Opportunities
- Wider financial inclusion
- Stronger competition
- New technology put to use
Risks
- Threats to financial stability
- Market power built on data
- Privacy and data misuse
The BIS adds a specific concern about big techs. Their business model rests on what it calls "DNA": data analytics, network externalities (a service becomes more useful as more people join) and interwoven activities. Those features can deliver convenience quickly, but the BIS also links them to risks for financial stability, competition and data privacy that regulators must balance against each other2.
What are the risks of using fintech?
Most fintech risks are ordinary financial risks wearing new clothes. The questions to ask are the same ones you would ask a bank: who holds my money, what happens if they fail, and how do I complain.
- Provider failure. If the company behind an app collapses, getting money back can depend on bankruptcy proceedings, which can take a long time5.
- Unclear protection. The words "bank-grade" or "insured" in an app do not tell you which firm holds the licence or which scheme applies.
- Data and fraud. Apps that connect to your accounts hold sensitive data, and scammers copy popular brands.
- Crypto platforms. The U.S. Securities and Exchange Commission has warned that crypto platforms may lack important investor protections and that crypto asset investments can be extremely volatile and speculative6.
Risk warning
Check before you deposit
Never move savings into an app until you know which licensed firm holds the money and what protection applies if either the app or that firm fails. If an investment or crypto product is involved, you can lose some or all of what you put in. Read our risk disclosure.
What mistakes do beginners make with fintech apps?
Common beginner mistakes
Assuming every money app is a bank
Many are technology firms working with a partner bank or payment company. Look for the licensed firm's name in the app's terms of service.
Treating a balance as insured savings
A balance in a payments or e-money app may not be a bank deposit at all, so deposit insurance may not apply.
Trusting the brand instead of the register
Logos and ads can be copied. Check the firm on the regulator's own register, as our guide on checking a regulated firm explains.
Ignoring how to get money out
Look up withdrawal limits, fees and complaint routes before you need them, not after something goes wrong.
A five-minute check on any fintech app
- 1
Find the licensed firm
Search the app's terms or website footer for the bank or payment institution that holds your money.
- 2
Look it up on an official register
Use the regulator's own website, not a link inside the app. In the U.S., the FDIC's BankFind tool shows whether a bank is insured5.
- 3
Read what is protected
Check whether your balance is a bank deposit, e-money or an investment, because each is treated differently.
- 4
Test the exit
Make a small deposit and withdrawal first to see how long it takes and what it costs.
Frequently asked questions
Is fintech the same as crypto?
No. Crypto is one corner of fintech. Most fintech involves ordinary money, such as card payments, instant transfers, digital bank accounts and online loans. Our blockchain explainer covers the crypto side.
Are banks fintech companies?
Banks are not usually called fintech firms, but they use and build fintech all the time, from mobile apps to instant payments. Many fintech start-ups also depend on banks to hold customer money.
Who regulates fintech?
There is usually no single fintech regulator. Each activity is supervised by the authority responsible for it, such as banking, payments, lending, securities or consumer protection. Our Policy section explains who does what.
Is my money safe in a fintech app?
It depends on who holds it and under which rules. A deposit at an insured bank is protected up to set limits; money held by a nonbank company that fails is not covered by U.S. deposit insurance5. Check before you deposit.
What is the difference between fintech and big tech?
The BIS uses fintech for firms set up mainly to provide financial services, and big tech for large technology companies that offer finance alongside many other activities2.
The bottom line
Fintech is a way of delivering financial services, not a type of licence. The app on your screen is often only the top layer; the firm that holds your money and the rules it follows decide how safe that money is. Learn the main categories, then check the licensed firm behind any app before you trust it with savings.
Sources
- FinTech — Financial Stability Board Primary source
- Annual Economic Report 2019, Chapter III: Big tech in finance: opportunities and risks — Bank for International Settlements, 2019 Primary source
- The Bali Fintech Agenda: A Blueprint for Successfully Harnessing Fintech's Opportunities — World Bank Group and International Monetary Fund, 2018 Primary source
- The Global Findex Database 2025 — World Bank, 2025 Primary source
- Is My Money Insured by the FDIC? (FDIC Consumer News) — Federal Deposit Insurance Corporation, 2023 Primary source
- Exercise Caution with Crypto Asset Securities: Investor Alert — Investor.gov, U.S. Securities and Exchange Commission, 2023 Primary source
How we checked this page: every figure above links to the numbered source it came from. Spotted an error? Tell the desk — see our editorial policy.
Read next
Fintech · ExplainerWhat is a neobank, and is your money protected in one?A neobank looks like a bank on your phone, but behind the app it may or may not be one. Who actually holds your money decides whether deposit insurance protects it, and how quickly you could get it back if something breaks.
Fintech · ExplainerWhat is open banking, and how does sharing your bank data work?Open banking lets you tell your bank to share your account data with another app, or to let that app start a payment for you. It began as a competition fix in Europe and is still being worked out in the U.S.
Fintech · ExplainerHow do card payments work, from tap to settlement?A card payment feels instant, but it is really a short conversation between several companies, followed by a slower exchange of money behind the scenes. Here is who is involved, what each one does and who pays for it.
Finance · ExplainerWhat is a stablecoin, and how does it stay at one dollar?Stablecoins are crypto tokens built to stay boring: one token, one dollar. Whether they manage it depends on what backs them, who can redeem them and what the law requires.
Policy · ExplainerHow do you check whether a financial or crypto firm is regulated?A licence number in a website footer proves nothing until you check it yourself. Official registers are free, public and take a few minutes. Here is which one to use and what to look for.
Tech · ExplainerHow does a blockchain work, and why is it so hard to change?A blockchain is a shared record book that thousands of computers keep in sync without a boss. Here is how the pieces fit together, from a single transaction to a chain of blocks.