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Knowing the difference between 'fintech' and 'techfin'
When we say the word fintech, are we all really talking about the same thing? A portmanteau of “finance” and “technology”, fintech has become a trendy buzzword for the finance industry, but can all financial technology really be described as fintech? Some say no.
The issue comes down to disruption. There is a difference between a company that offers a technology solution to established financial institutions and a startup that is uses technology to find entirely new ways of handling money. James McKeogh — a partner at KPMG who is leading the firm's fintech initiative in China — say this is the difference between techfin and fintech. At the first Cyberport NexChange Fintech O-2-O Meetup in September he told NexChange:
"We are seeing an awful lot of techfin in Asia at the moment where existing financial capability is being optimized through technology, but I'm really keen on the area where we are seeing new products some out."
Not everyone uses the terms fintech and techfin, but similar distinctions have been made. Earlier this year FSClub blogger Chris Skinner noted the difference between traditional fintech and emergent fintech. Like techfin, the first group includes 'facilitators’, larger incumbent technology firms supporting the financial services sector, while the second group are the ‘disruptors’ with small innovative firms disintermediating incumbent financial services.
Often these traditional — techfin — players will offer partial stack solutions: taking new technologies and then selling or licensing them to big banks. Most of the real disruptors however are the full stack startups offering the end-to-end solutions that cut out existing players. We have seen this in other sectors such as with Uber and taxis, Netflix and cable, or AirBnB and hotels. This, some argue, is real fintech, and banks are terrified of it.
Photo: Caleb Roenigk