Forbes: the Future of financial services — FINTECH or “tekhfin”?
The banking industry is rapidly changing, says Forbes in his article. In the past few years, traditional financial institutions and non-traditional FINTECH— startups have begun to realize that their mutual cooperation can lead to stable long-term growth. At the same time, large technology companies began to offer financial services by creating financial technology solutions.
Banks and FINTECH companies join forces and create joint ventures. Most FINTECH companies have original, innovative approach, customer-oriented flexibility and infrastructure based on digital technology — that which is not the majority of the financial institutions of the “old school”.
On the other hand, traditional companies have the necessary scale, a recognized brand and also enjoy the trust. They have the money and experience compliance with regulatory requirements.
In the report of the 2018 World Fintech companies CapGemini and LinkedIn says:
Most successful FINTECH companies focused on narrow segments, which have to solve complex problems that traditional financial institutions are not engaged. Traditional financial institutions have an extensive client database, tools, and outmoded payment system that hold them back.
The task of joint enterprises is to create an environment where collaboration thrives and brings benefits to both partners.
The financial technology versus the “technology Finance”
The difference between the already familiar ear pineham and newfangled “tehina” can be determined by the nature of the services of the company.
FINTECH is usually applied to the organization, which seeks to provide consumers with the best financial services through digital technologies to reduce costs, increase revenues and eliminate contradictions.
A good example of FINTECH services are mobile banking services offered by most traditional banks. PayPal, Venmo, and Zelle in the United States, and Starling Bank, Monzo and Revolut in the UK with their innovative financial proposals can also be attributed to FINTECH.
“Tekhfin” in turn, generally refers to a technology company that strives to find the best way to provide financial products along with other services. Examples of “tekhfin”— companies — Google, Amazon, Facebook and Apple (GAFA) in the United States, as well as Baidu, Alibaba and Tencent (BAT) in China.
Two years ago Jack MA, CEO of Alibaba Group, spoke about the difference between pineham and “tehina”:
The future of the financial industry promises us two great opportunities. One of them is online banking, where all financial institutions operate on the Internet, and the other is the Internet of money, provided by third-party inventors.
In both cases, the success of organizations in the field of Finance will depend on their abilities:
to collect and analyze massive customer data;
to explore ideas to improve your personal approach;
to carry out digital interactions with customers in real time;
to expand/change the package of proposals when customer needs are also expanding or changing.
The new competitive landscape
Even with the successful cooperation of financial institutions and FINTECH companies of the future banking ecosystem will have to compete with technological giants that are already pretty effective, as they are able to reduce transaction costs and to monetize their business model.
As the newspaper writes Bain, “many tech giants have the ingredients of success: a digital “knowledge”, the largest customer base, experience optimal interaction with clients and sufficient space for expanding/promoting their financial brands.” Concerns can cause just that to win the trust of clients they have “on the job”, while traditional banks and credit unions that level of trust is already there.
As a result, more users are willing to use non-traditional financial products, especially in cases when their quality is better than that offered to conventional banks. Competitive balance may also change due to the recognition of other enterprises (e.g. retail traders) of such unconventional financial offers.
It is expected that the demand for FINTECH products and “tekhfin” companies will only increase as growth in the number of consumers, opening for himself or another new digital offers. This applies particularly to young consumers who have literally grown up on digital devices.
Chris Skinner, an independent financial observer, says:
“Tekhfin”-companies exploring new technologies and trying to figure out how to use them for commercial purposes. On the other hand, financial technological company, having considered the work of commercial structures, aim to make operations faster and cheaper with technology. I make this comparison: FINTECH companies are trying to make horses faster, while “tekhfin”-the company dealing with aircraft.
It seems that customers will increasingly annoyed from the traditional banking policies and “non-digital” processes, on a daily basis serving their business. Traditional banking organizations will not be able to rely on the provision of current accounts and loans. Their competitors have already caught a significant part of the cost of banking services, and in the future, the role of banks in this area may be close to zero.
The future of banking will depend on the ability to know and understand each client, the use of advanced analytical and digital technology — that helps the modern “high-tech” customers to better manage their finances and daily lives.
As FINTECH and “tekhfin”— companies adhere to broader views on the financial service offering both banking and non-banking services, the ultimate winner should be the consumer — no matter what financial service provider he has chosen.