As per a recent global analysis, “there is no universally accepted definition of FinTech,” The study underscored how fragmented and inconsistent current taxonomies remain across academia, industry, and regulation.
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The problem with current fintech labels
FinTech has rapidly evolved from niche payment platforms to a multifaceted ecosystem spanning digital lending, investment, crypto, insurance, and embedded banking. Yet most classification systems remain tethered to business-centric taxonomies, such as payments, lending, or Insurtech, which work up to an extent but fail to reflect the deeper structural, technological, and stakeholder dimensions that define modern FinTech innovation.
Although two years old, but this study presented the state of Fintech taxonomies very well. The study mapped over 500 academic FinTech publications revealed the absence of a standardized, multi-dimensional classification system. Most studies simply categorize by vertical (e.g., banking vs. crypto) or domain (e.g., risk vs. onboarding), leaving critical overlaps and systemic confusion unresolved.
Why do the current fintech taxonomies fall short
Conventional fintech taxonomies classify firms by sectors, such as wealth, payments, lending, and Insurtech etc. However, these categories overlook:
- Technology stack: AI or blockchain adoption, platform vs. API-first, cloud vs. on-prem.
- Business model variables: consumer-facing versus B2B enterprise; freemium versus subscription.
- Functional mechanisms: platforms embracing open finance, RegTech embedded analytics, or embedded lending across non-financial apps.
The classification of fintech is narrow and it doesn’t demonstrate comparative analysis and challenge meaningful regulatory oversight. Despite the term being extensively utilized for financial institutions, the rolling definition struggle to encompass its full potential.
Even central banks struggle: a BIS policy paper noted that international financial statistics frameworks like NACE and ISIC still lack explicit categories for core FinTech activities, creating data gaps and oversight challenges.
Fintech needs a new and multi-dimensional lens
We are witnessing fintech innovations day-in and day-out. One such breakthrough is embedded finance, where same function are embedded into different platforms. For example, credit, insurance, and investment are embedded into retain apps, gig platforms, or e-commerce, as per the need. Labeling each of these functions mere as “lending” or “Insurtech” fail to explain the fundamental difference of their operations and systemic risks.
Hence, a need is emerged and researchers have proposed frameworks where fintech will not only be classified by vertical alone but also by technology, stakeholder role, and business model archetypes.
Misalignments in current fintech taxonomies
- Crypto exchanges and digital wealth platforms: Both of them are different types of investment but within fintech, they come under “investment fintech” only. But both of them differ radically in terms of asset-types, regulatory exposure, and technology dependencies.
- RegTech embedded in lending workflows: A platform combining identity verification, AML checks, and loan origination straddles regulatory, Insurtech, and lending verticals left uncaptured in traditional frameworks.
- SuperApps offering payments, credit, insurance, and merchant services: All of these financial services are different and it is Impossible to pigeonhole under one label without losing key business model distinctions.
Such misalignment affects investors, regulators, and researchers alike, undermining insights into market risks, innovation hotspots, and product design.
Forward-looking living FinTech framework
Today, businesses do not need rigid fintech verticals, they need a living and evolving ontology, a well-structured taxonomy across multiple axes, such as:
- Verticals: Banking, payments, lending, investing, insurance, currency, embedded finance
- Horizontals: Core technologies (AI, blockchain), functional domains (RegTech, open finance, identity, transaction monitoring)
- Stakeholders: Consumer, SMB, enterprise, gig workers, platforms
- Business / Delivery Models: Embedded finance, platform-as-a-service, API-first, joint ventures
A study has tried to show emerging work in clustering frameworks. It reveals that these layers can be mapped, tested, and evolved over time.
Benefits of a fluid, multi-dimensional taxonomy
- Better alignment with modern innovation: Includes embedded models, generative finance, platform APIs are captured.
- Improved oversight and international data comparability: Regulators and central banks can monitor systemic risk more effectively.
- Stronger academic collaboration: A shared taxonomy prevents fragmented studies and duplication.
- Smarter investment strategies: Portfolio optimization across archetypes and shared risk configurations becomes possible.
Fintech collaboration and clarification
Building a shared, living, and evolving fintech classification requires a collaborative approach from academia, regulators, and industry practitioners. When every stakeholder comes together and co-develop a framework, implement it into their respective arenas, it becomes more adaptable.
The goal is clear: classification systems should reflect the discipline’s fluidity, not attempt to contain or freeze it.
Fintech isn’t static, it is evolving with how the finance function evolves through layered innovation, cross-platform moderns, and regulatory depth. Modern fintech demands niche classification frameworks that are dynamic, multi-dimensional, and alive, not outdated rows in an industry grid.
As the industry matures, scholars, regulators, and ecosystem players must unite to build living taxonomies that evolve with the business, technology, and policy changes.
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