What is fintech|When you consider the future of banking, there are two options on which there is an ongoing debate. These two options are Fintech Or Tech-fin.

Irrespective of the phonetics, these two seems to become the governing factor in the coming years in the banking industry which is experiencing a lot of disruption in its operation and activities.

Over the past couple of years, the traditional Financial Institutions are provided with a significant challenge by the non-traditional fintech firms. The so-called orthodox lending mechanism has realized that there is no other alternative but to collaborate their operations in order to survive and assure productive and long-term growth.

Over the years, the big tech firms have been providing Financial services thereby creating the platform for tech-fin solutions. Given such a scenario, it is reasonable and rational enough to collaborate and bring back the strengths and increase loaning ability of both banks and fintech firms.

It is believed that when these two works together it will be easy to create a stronger entity than each of these working in their individual capacity and bring it on their own. When you consider the fintech organizations, their main advantages are:

• An innovation mindset
• Consumer-centric perspective
• Dexterity and speed to adjust
• A better infrastructure built for the digital mindscape.

Alternatively, these are the advantages that most of the legacy financial institutions do not possess making them a weaker resource. However, the traditional lending sources have other significant attributes and advantages such as:

• Scale
• A stronger brand appreciation
• An established trust
• An adequate capital
• Extensive knowledge of the regulatory compliance and
• An established distribution network.

Given the varying and useful attributes of each of the two types of lending resources, the primary challenge lies in the ability to create an atmosphere that will help such a collaboration to flourish which is opposed to the stifling but beneficiary attributes of each of the partners.

According to the 2018 World Fin-tech Report from Capgemini and LinkedIn partnership with Efma, it is found that most of the successful fintech firms focus on specific segments or narrow functions.

These segments have high friction levels with the traditional financial institutions that leave a large percentage of the people looking for funds underserved. They struggle to scale profitably on their own.

It is also seen in the report that though the traditional financial institutions have deep pockets and a vast customer base and deep pockets, it is their legacy systems that hold them back from funding every Tom, Dick, and Harry. This is the reason these people look for alternative resources such as https://www.libertylending.com/ to meet with their loaning needs.

Fintech vs. Tech-fin

The difference between fintech and tech-fin is typically built on the origin of the principal organization.

• Fintech usually refers to an organization where the primary function is providing financial services. They have lots of experience and use digital technologies to reduce the cost of loaning, increase revenue from it and remove friction as well.

• One of the most rudimentary examples of a fintech offers the mobile banking services which most traditional banks also offer. However, more commonly fintech refers to specific non-traditional financial offerings as well such as PayPal and others.

Alternatively, tech-fin usually refers to the technology firms that also offer financial products as a part of their wider offering of services. Few common examples of tech-fin companies include:

• Google
• Amazon
• Facebook and
• Apple and several others.

With all these aspects taken into account, the future of the financial industry seems to be very bright and changing at a rapid pace. It has provided two big opportunities that will play a very significant role in the future ensuring much growth for both traditional as well as non-traditional financial institutions.

These two opportunities are:

• Online banking where all these financial institutions work online and
• Internet finance is entirely led by outsiders.

In both cases, the level of success of these organizations is based on the ability of each of the types of institutions to collect and collate data.

With proper analysis of the data sets they can learn the ways and have different insights to improve personalization of services as well as the digital engagement in real-time. Eventually, this will help each to expand their offerings so that they can easily and effectively meet with the varied consumer needs.

New competitive landscape

The new landscape thereby provided has made the financial service industry more competitive. Even after collaborating with each other to lend their services, the capability for the legacy financial institutions to compete with the tech-fin powerhouses is further challenged considering the future banking ecosystem.

The technology organizations are usually built on digital platforms and therefore are more efficient. With the use of better and most advanced technology, these organizations have already found easy and effective ways to reduce the operational costs of their services.

They have been therefore able to monetize their business models even more efficiently than the legacy financial institutions.

According to the experts, there are several reasons for the tech giants to taste more success its counterpart. They have just the right ingredients of success that include:

• Digital prowess
• Abundant leeway for extending their corporate brands to banking
• A large customer base
• Well versed with the ways to improve customer experience and
• More concerned and focused on generating a level of trust.

All these attributes were previously reserved for the traditional banks and the credit unions only.
Therefore, with more sources available, there is an increase in the percentage of consumers who look for and are willing to use the financial products that are offered by these non-traditional firms.

They also go there as they especially experience superior customer service to that offered by the legacy organizations. This potential to shift proceeds from other businesses to enhance their banking offerings has eventually changed the competitive equilibrium completely.

As consumers become more familiar with the digital offerings, it is expected that the demand for such products from the fin-tech firms will only increase.

Author Bio
Marina Thomas is a marketing and communication expert. She also serves as a content developer with many years of experience. She helps clients in long-term wealth plans. She has previously covered an extensive range of topics in her posts, including money saving, Budgeting, business debt consolidation, business, and start-ups.

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