Technology advancements have set their pace to be much faster, much more efficient, and much more reliable, hence making their presence almost inevitable in our day-to-day lives. It has changed the way people perceive any task, in any field, and so is the finance sector without an exception. Big businesses prefer technological investments, or solutions to get better results in terms of profit as well as customer service, by simplifying the tasks that otherwise are not possible manually.
For better understanding, check out the real-life example where people have gradually shifted to digital banking or payment modes from the traditional banking methods with time. The financial management techniques are such that everything including the currency is digital. Similarly, on the larger scale when it involves technology and money, two major terms enter the topic, which is Fintech and Techfin. They have influence over our banking sector to the extent that everyone is looking forward to it, which is the future of banking: Fintech or Techfin.
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In this article, we will deal with the aspects to understand these terms better by analyzing facts of Fintech vs Techfin. It will also include the relationship between Fintech and TechFin, along with the difference between Fintech & Techfin, to conclude which is the future of banking.
The two biggest assets that drive this world are providing data-driven solutions along with the right technology. Incorporation of technology along with the data is the force that also drives the Fintech or the financial technology sector. For several decades, all the businesses have focused on chasing the money, which is like putting in the textbook hard work or efforts, and this is the base on which the financial sector is deeply rooted.
As the companies like Uber, Samsung, Amazon, etc are rising, they are disrupting the financial sector’s market by proving that it is high time people shift to data-oriented or data-driven businesses or risk failing with time. Also, on the other hand, Artificial Intelligence (AI), machine learning, data analytics, etc are booming successfully, along with the rise in the number of new entrants into the financial sector. This aspect makes the Fintech sector stand out.
These new entrants have a strong customer base and data and are usually non-financial organizations hence setting the bar high for businesses that are data-driven in the financial space. These are also known as Techfins, which are nothing but technology-oriented organizations entering the financial sector to make a profit using the data along with the support of technology.
Earlier all these data collected on a large scale had limited applications, such as mainly for the marketing activities, improving customer base, and ensuring that the product market keeps expanding, but today Techfins prove to bridge the gap of customer demand and the current market solutions, by investing in the exact thing that consumer is looking for.
Hence, Tech Fins are more customer-oriented to provide a better experience through their business services and financial services. One of the best examples is the current shift of Techfins to focus on providing seamless digital or mobile payment options to the customers which are also predicted to triple by the end of this year. This drastic rise in terms of money sums up to $148 billion from $52 billion!
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The transition of the financial sector on a global scale has been very high for the past few years. The major change or shift is towards the digital system of banking such that transaction modes that are now preferred are digital currency exchange rather than physical currency in the banking sector. Its impact hovers over the worldwide global economy. To support this paradigm shift, many financial firms have started to collaborate with non-financial Fintech firms to bring together digital technology as well as services to customers.
Techfin is a very recent trend that was first coined by Mr.Jack Ma, that is currently competing with the Fintech sector hence there is a question that arises, which one of these will be the future of banking: Fintech or Techfin. The entry of Techfin in the banking sector has led to several debates to predict the future of banking and to find answers to this important question, we must have a deeper understanding of knowing the differences and the relationship between Fintech and TechFin.
The main difference between Fintech and Techfin is their source to establish themselves as an organization or business entity. Fintech is the organization category that focuses on the objective of ensuring that better customer service or experience is provided using digital platforms that help in reducing labor costs but improve revenue generation. Fintech is part of global businesses only since the past decade but is steadily rising as it proves to be really helpful during the time of crisis, by allowing several investors to pitch in. Some of the examples that support digital banking services are Google Pay, PayPal, PhonePe, etc.
Now that we know what Fintech is, let us compare it with Techfin. Techfin refers to businesses related to technology aiming to offer financial services with help of the existing tech services. These services are not confined to the financial sector, and unlike Fintech, they provide financial solutions as a part of their services. Some of the best examples of Techfin services are Amazon, Google, Instagram, Facebook, Alibaba, etc.
Conclusively, both the Fintech and Techfin firms are booming at a highly competitive rate as both of them have enormous potential to change the financial services and economy. The future of the banking sector depends on the power to deliver services, handle their customers looking for tech or digital solutions, and generate revenue. So, it is clear that no matter whichever provider one chooses, the winner would be the customers as both financial and technological solutions allow a wider range of banking experiences.
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In this article, we have discussed the aspects related to the future of banking: Fintech or Techfin, along with analyzing their principles, relationship, and differences. Hope this was useful in understanding Techfin as well as Fintech services that are currently the trend of businesses and the banking sector.