FinTech vs. TechFin: Where is the Future Headed?

Fintech Vs Techfin

The financial industry across the globe is facing an influx of changes since the past few years. The traditional financial establishments and non-traditional fintech firms have begun to comprehend that collaboration could be the best path to reap the long-term objective. It could bring strengths of both banks and fintech institutions together to create a robust entity than either unit bringing it on their own.

According to the 2018 World Fintech Report from LinkedIn and CapGemini, in association with Efma, the most successful fintech firms have focused on linear functions or segments with high friction levels or those underserved by traditional financial systems, but have struggled to scale on their own profitably. Traditional financial firms have a vast customer base and deep pockets, but then again, legacy systems are holding it back.

However, at the same time, big tech firms are proposing financial services, forming TechFin solutions. So, what exactly is TechFin? And what impact would it carry on financial organizations? Will this latest trend in banking technology introduce itself as the future banking ecosystem? Although it closely resembles fintech, the idea in itself is entirely different.

FinTech vs. TechFin

The difference between fintech and TechFin is primarily based on the origin of the fundamental organization. Fintech refers to an organization where financial services are offered through a better experience with the help of digital technologies to eliminate friction, lessen costs, and upsurge revenue. One typical example of a fintech offering is the mobile banking services that are offered by traditional banks.

Also Read: Top-most Fintech Trends Transforming Financial Technology


On the other hand, TechFin references a technology firm that determines an improved approach to deliver financial products as part of their wide-ranging offering of services. Google, Facebook, Amazon, and Apple (GAFA) in the United States and Baidu, Alibaba & Tencent (BAT) in China are some of the primary examples of TechFin companies.

Jack Ma, co-founder and executive chairman of Alibaba Group, defined the difference between Fintech and TechFin as, “There are two big opportunities in the future financial industry. One is online banking, where all the financial institutions go online; the other is internet finance, which is purely led by outsiders.”

In both the forms, the success of organizations in a financial segment depends solely on the ability of the institution to collate and evaluate massive data sets, learn from its insights to enhance personalization and engagement in real-time, and increase offerings to customers.

Will TechFin Win the Battle?

The capability for legacy financial firms to compete in the future banking ecosystem will definitely be challenged by the TechFin dynamos. Made up of digital platforms, the huge technology organizations are not just efficient but have also found ways to decrease operational costs and monetize the business models.

We know that most of the tech giants possess digital skills, a vast customer base, and ample flexibility to extend the corporate brands into banking. And, some of these firms are spawning a level of trust which was formerly earmarked for traditional banks and credit unions.

An increasing percentage of consumers are all set to use financial products offered from the non-traditional institutions, especially when they receive superior experience compared to that provided by legacy firms. This is particularly true for younger customers who grew up with digital devices.

Final Thought

In conclusion, we can say that the future of the banking industry depends on its aptitude to leverage advanced analytics, customer insight, and digital technology to offer services that help today’s tech-savvy consumers better manage their finances every day. So, the ultimate winner will be the consumer regardless of their selected provider.