The short answer is anything that boosts or automates finance for consumers and businesses. That could be a mobile app that allows people to transfer money, invest or get loans all from the convenience of their smartphone. Or it could be a software platform that uses artificial intelligence to provide personalized financial advice. It could also be a new kind of currency, such as Bitcoin, that operates on the blockchain and offers secure and transparent transactions.

What is Fintech banks and other financial services providers are paying close attention to fintech as they struggle to keep pace with consumer demands for technology, personalization and immediacy. In many cases, fintech companies are able to offer faster or cheaper solutions than their more established counterparts because they operate with lean operating models that require less real estate and staff.

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In addition to a digital platform, fintechs often use advanced technologies such as artificial intelligence and machine learning to reduce costs and deliver better results for their customers. They are also nimble and often target an underserved segment of the market or offer a unique product that is difficult to replicate by traditional institutions.

In the United States, for example, fintechs like Affirm aim to cut credit card companies out of the online shopping process by offering immediate, short-term financing directly from the merchant, while Robinhood provides commission-free stock trading. Most fintechs are also online-only, meaning they do not have physical branch locations and may not have phone support. They may also rely on “partner banks” to sweep deposits across a larger network, which can provide additional FDIC insurance beyond the standard $250,000 per depositor protection offered by traditional banks.