According to the report Fintech and The Disruption of Retail Trading: Trends and Case Studies by the business school INSEAD, there are the following types of fintech companies:
1) Basic advisory
They rely on user-friendliness and smooth customer experience. These fintechs keep costs low, they offer algorithm-based advice and sometimes enable investing with zero brokerage fees.
2) Advanced advisory
They provide more complex trading strategies and analytics. Because often they offer advice and suggestions like traditional asset managers, they can charge higher fees.
3) Advisory-as-a-service
They offer solutions to financial institutions, enabling them to extend their CRM tools.
4) Portfolio analytics/Market intelligence
Advanced analytics and monitoring for retail traders is the core product here. It can be portfolio reporting and analytical tools for wealth managers.
In market intelligence, fintechs offer a social platform for traders where they can interact and share trading strategies and algorithms. Retail investors then can discover trading opportunities via technical and fundamental analysis.
The future of retail fintech is bright
Some fintechs in retail investing are independent and offer end-to-end onboarding and trading services. Other fintechs rely on top user experience and collaborate with financial institutions.
Technology is probably going to further change the industry. Fintechs may eventually optimise their recommendation engines and begin offering tailored trade recommendations, just as Youtube recommends the next videos. Trading data may be also monetized through market intelligence.
-jk-