After disrupting the financial sector, fintech is increasingly collaborating with traditional banking institutions, combining the innovative mindset of fintech startups with the scale, strong brand recognition and established trust of traditional banking institutions. However, a new disruptive force is on the horizon: techfin, companies such as Google and Facebook that have their roots in technology and now offer financial services too. Amazon, for example, is expected to offer a cobranded, mobile-friendly, checking-account-like product initially targeted to young adults. Technological companies are already dominating the mobile payment market by 94% in China: Alibaba through Ant Financial and Tencent through WeChat. Their ambitions do not stop at mobile payment: the money-market fund, for example, is also on their list.
What does this mean?
So far, the financial services that tech companies have developed are not fundamentally different from fintech solutions. However, the relationships that these companies have with their customers differ a great deal. Ultimately, this comes down to the amount and nature of personal information tech companies have about their users and their commercial interest that goes beyond the financial sector. As a result, technological companies could, for example, combine their knowledge of the budget and spending patterns of their customers with a greater insight into a person’s behavior, preferences, personal circumstances etc. This would give them the ultimate position to anticipate and maybe even influence our spending pattern by, for example, offering a specific product at the right time that fits our budget. Furthermore, they could make it particularly beneficial and easy to buy that product with the help of convenient financial services and special membership rewarding systems.
At present, techfin differs from fintech mainly because of the underlying organization that offers a financial service, and it still seems a distant scenario that customers will entrust technological companies with their salaried accounts. However, the increasing use of their financial services will nevertheless enable them to offer far more personalized financial services that might lead consumers to increasingly spend money on their products, brands or services.