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The Difference Between Fintech and Techfin

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Technology brought many changes in every sphere of our life, and the financial one is not an exception. Giant companies actively implement smart technology solutions to provide better customer service and simplify various currency operations. 

Have you noticed how seamlessly we’ve transitioned from traditional banking to digital one? We tend to manage our finance using applications; even the currency became digital. You’ve probably heard about two concepts called Techfin and Fintech, which keep influencing the banking system and the way people do business. As numbers speak louder than words, let’s look at the statistics we’ve collected.

According to the market forecast of them trust and value Fintech partnership. 

As to Techfin, it is well-known that many companies are currently focused on implementing mobile payment options. The latest report states that in countries of the European Union, payments via mobile devices will triple by 2021. If we speak about the money, it is predicted that the sum will increase from $52 billion to $148 billion. 

Taking into account all these figures, we cannot help but ask ourselves the most important question: “Will Fintech or Techfin become the future of our banking? Is there going to be a tough competition?” 

To find the right answers, let’s distinguish Fintech from Techfin and check out how and in what spheres they are applied and their main functions.

Key differences between Fintech and Techfin 

Although these two words sound alike, they differ a lot. To put it simply, Fintech implies the concept when the finance industry resorts to technologies to provide high-quality service, increase financial profit, and reduce costs. The most common example of Fintech is an online banking application provided by a physical bank. Everyone uses such services, and they simplify the process of managing our money. There are also some non-traditional services related to FinTech, such as PayPal, Venmo, Zelle, Starling, or Monzo. They all are digital payment services widely used in the USA and Great Britain. 

As to the Techfin, it is applied by technology-based providers. They offer new financial services that influence users’ interaction and help to expand the range of services. You’ve definitely heard about such business giants as Google, Apple, Facebook, Uber, Vodafone, Samsung, Microsoft, Alibaba, and Baidu. Although all these companies are located in different corners of the planet, what unites them is that they resorted to Techfin and implemented new services for money operations. 

F.e. Apple introduced Apple Pay which popularity skyrocketed, and now numerous websites and applications have this option. Every business starting with food delivery and ending with traveling implements Apple Pay. The ability to perform contactless payment is the biggest trend of the last decade. 

One more good example is Facebook and its announced cryptocurrency. This year Libra and a digital wallet called Calibra are going to be introduced. Libra will be of use to those who do not have access to any banking account. Travelers will appreciate its benefits as they will not have to exchange currency when being abroad. Libra can be used to pay for goods and services. However, this topic is contradictory, and people state that they would not trust Facebook with their money. Well, let’s wait and see how it all turns out. 

Amazon has its own payment method and also a digital wallet. It doesn’t matter whether you are a merchant or a buyer; you can equally easily benefit from Amazon Pay. Customers can simply sign-up and buy any product, and sellers can quickly get their credit card info. There is also an option allowing you to link-up with Amazon Pay to use it while buying goods from other stores. The customers will not need to create a new payment account to shop.

Sellers who use Amazon service should pay a fixed sum of money for authorization, and there is also a fee for transaction processing. The first one is $0.30, while the latter requires almost 3% from transactions within the country and almost 4% for cross-border transactions. That is a great deal of income that Amazon shares with the card-issuing companies and payment networks.

A new platform providing financial services was introduced by Uber last year, and it is also worth mentioning. This service is called Uber Money, and it allows both drivers and passengers to sign up for a debit or credit card. The latter will track their expenses, while the drivers could benefit from cashback on gas if they choose a debit card. 

How they change financial services

At first sight, it may seem obvious that Fintech and Techfin would both benefit from cooperation. Their mechanisms and range of services can complement each other and attract more business companies and users. Nevertheless, the current situation shows that Techfin and Fintech tend to compete, and this struggle is rather tough. To illustrate it better, we will provide a couple of real examples. 

Let’s speak about China. You may have heard about such applications as WeChat. Chinese citizens use this giant messaging app for making video calls or texting each other. WeChat has an integration with other services (games, ticket booking, shopping, etc.). It is more important to sign up for a wallet and perform financial operations within the app. 

You will rarely see any cash in China because all locals pay for goods, services, and household using WeChat. People understand all the key advantages of this convenient payment method, and they rarely open a real bank account. This means that Techfin triumphed in the Chinese financial system. 

One more financial giant Google sees the future of banking in AI. Google launched its own paying service (Google Pay) in 2015, letting all users enjoy making purchases using tap-to-pay options. Since that time, the company has improved the services and worked upon developing voice assistant functionality and adding more integrations to the payment system.  It also invested a lot into AI development to make buying goods, ordering food, paying for rent, and many more quite predictive and fully automated. 

If you use Facebook Messenger, then you are probably aware that it has a peer-to-peer payment option. Facebook users can transfer money to their friends in a conversation box without any fuss due to this service. The debit card of a user is linked to Messenger, so the user can easily perform a transaction at any moment. Facebook has 200+ million users in the USA, 6% of whom use peer-to-peer payments a couple of times daily, and 3% perform money operations at least once a day. So basically, a communication app became a powerful financial tool. 

In one of our previous articles, we have already covered the topic regarding why every bank needs an application and what trends should be taken into account. As experts in software development, we know how to build online banking applications or implement Apple Pay. But as you can see from our examples, not only banks require apps. If you are searching for a way to enter the digital market, then creating an application with a financial component can be the best choice. As you know, many financial giants strive to improve their business using technology, and this tendency will probably keep being popular. 

To conclude

Although banks’ tech only started its way towards massive changes, we will observe major progress soon. Applications with online payment options are already a part of our daily life, and they will only keep improving and getting more advanced.

The changes are inevitable, so whether Fintech or Techfin would win the market, the main winner will always be customers. After all, the main goal of technology implementation is to make clients’ lives easier. And that is exactly when all kinds of fintech apps (banking and investment ones) come in handy. 

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