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  • Patricia Jimenez

Fintech vs Techfin

In today's fast-paced digital world, technology has permeated almost every aspect of our lives, including the way we handle our finances.

A report by McKinsey reveals that 40% of financial activities are fully automated

The rise of fintech, short for financial technology, has sparked a revolution in the financial services industry. Fintech companies are leveraging cutting-edge technology to disrupt traditional banking and transform the way we manage our money. However, it's essential to distinguish fintech from another buzzword in the industry: techfin.

In this article, I will delve into the key differences between fintech and techfin and explore both to know who is shaping the future of financial services.

So, let’s start explaining both concepts:


Redefining Financial Services Fintech companies are trailblazers in the financial landscape. They are driven by innovation, harnessing the power of technology to improve financial systems and provide seamless experiences to consumers and businesses alike. These agile startups and tech-focused companies employ technologies such as artificial intelligence, blockchain, mobile apps, and data analytics to revolutionize financial services. From online banking and digital payments to peer-to-peer lending and robot-advisory platforms, fintech companies are challenging traditional banking norms, eliminating barriers, and bringing financial services directly into the hands of the masses. Fintech is democratizing finance, making it more accessible, efficient, and convenient.

A fintech company takes a targeted approach by finding gaps or inefficiencies in existing processes and implementing emerging technologies to address the issue. Fintech uses API (Application Programming Interface), Artificial Intelligence (AI) and machine learning (ML), and Blockchain to develop novel solutions in diverse fields of financial services, including payments, lending, money transfers, investment advisory, and open banking Neobanks, another type of Fintech, are online-only or digital banks with no physical locations. They offer individualized services to clients while cutting operational expenses by integrating technology and artificial intelligence.


Technology Giants Entering the Financial Realm Techfin, a term coined by Jack Ma, represents a different facet of the fintech revolution. It refers to established technology giants like Alibaba, Google and Apple that expand their business scope to include financial services. These companies already possess a vast user base, cutting-edge technology infrastructure, and extensive data analytics capabilities. By venturing into finance, they seek to leverage their existing platforms and customer relationships to offer a seamless integration of financial services. From mobile payment solutions and lending services to wealth management products, techfin companies provide an added layer of convenience and value to their users, capitalizing on their dominant position in their respective industries.

TechFin consists of technology businesses whose major business does not finance but who include financial services into their core products to make them more appealing. These firms intend to disrupt the banking and financial services industry by leveraging their current customer connection and behavioral data.

TechFin is initially focused on the distribution side of the financial services industry but is content for banks to manage regulatory compliance obligations. They are interested in acquiring access to clients’ financial transaction data, which diversifies their existing customer data and provides them with a true financial portrait of their customers.

TechFin firms are interested in augmenting existing client data with transactional information in order to enhance their main product and provide supplementary financial services.

Techfin denotes a technology company that enters the financial sector to innovative products and services which are aligned with the company’s needs. It refers to companies that launch financial solutions integrated to an internal management system, working with financial resources and providing a centralized view of data in one interface.

The investor and Entrepeneur created the first techfin model by incorporating along with the BATs (Baidu, Alibaba, Tencent) financial products into already-popular applications.

A Techfin focused on providing innovative and modernized financial services, centered on technology, data and the customer base

Techfins collect data for themselves, but focus their data collecting on identifying customer needs, payment behaviors and latent needs to make the most of available business opportunities.

How does techfin works?

This companies given their B2B focus, they wanted to be transforming the traditional mechanism handled by corporations and financial institutions into simplified processes that are available to all, techfins make financial tools available to an organization's conventional platform, extending services to companies that don’t necessarily belong to the segment.

Benefits that techfin provides

  • Personalized services

  • Saving time in implementation of technology

  • Practicality

  • Minimizing errors

  • Fewer mistakes

  • Analytical data

  • Automation of processes

  • Security

  • Integration with different tools

“Fintech takes the original financial system and improves its technology, whereas TechFin seeks to rebuild the system with technology.” Jack Ma

Fintech through the years

Some years ago...

10 years ago, the development of modern financial software began amid the global financial crisis, which persuaded incumbents to struggle for survival.

More and more businesses and people entered this digital game, such as Square and PayPal, which were pioneers in this, while this was happening, new offers of this kind of services were presented in the market, their best tool, to improve the user experience.

Because when there begins to be more supply than demand, the main differentiator that can give an advantage over the competition is friendliness with the user and the ease that the user will have to understand and use.

Techfin will bring a momentous revolution not only in the use of financial institutions, but also in the rationale for their very existence.

More and more businesses and people entered this digital game, such as Square and PayPal, which were pioneers in this, while this was happening, new offers of this kind of services were presented in the market, their best tool, to improve the user experience.

The 3 phases of the IT enabled business transformation

  • 60s and 70s

The first wave of IT-enabled corporate transformation mechanized individual tasks, resulting in greater productivity and efficiency.

The first generation of banking and financial services transformation implemented core banking solutions that where mostly built in house

Think about your bank, it's probably that nowadays you find different products from the same bank, such as credit cards, debit cards, medical insurance, car insurance and even mortgages

  • 90s

The second wave of IT-enabled corporate transformation comes with the internet’s cheap and pervasive connectivity facilitating information access. Internet applications disrupted the traditional corporate value chain, thereby increasing market competition. Internet enabled institutions give customers online means to access banking services.

  • 2010

In the third phase of IT-enabled company transformation, information technology becomes an inherent component of the product, erasing industry boundaries. The third generation of banking and financial services transformation is defined by the embedding financial services such as payments and lending within the core products of non-financial enterprises to increase the attractiveness of the core offers.

The first in their industry to utilize information technology to acquire a competitive advantage was Banking and financial industry that have always been information intensive with high information content core products and operations.

Differentiating Fintech and Techfin

Core Characteristics To comprehend the d 0 distinction between fintech and techfin, it is crucial to focus on their fundamental characteristics:

  1. Origins: Fintech companies emerge as technology-focused startups, aiming to disrupt and innovate within the financial services sector. Techfin, on the other hand, consists of established technology giants diversifying their operations to include financial services.

  2. Approach: Fintech firms prioritize technology as the driving force behind their financial solutions. They deploy cutting-edge tools to enhance accessibility, efficiency, and user experience. Techfin companies, conversely, employ their dominance in technology to expand into finance, leveraging their existing user bases and platforms.

  3. Disruption vs. Extension: Fintech disruptors challenge traditional financial institutions and models, introducing alternative solutions that often bypass intermediaries. Techfin entities, being technology giants, extend their operations into financial services, building upon their existing technological infrastructure and customer relationships.

Fintech Vs. TechFin: Key Differences

Unlike Fintech, TechFin leverage captive customer data. When building solutions, Fintech companies do not have a captive consumer base, data, or brand loyalty. TechFin, on the other hand, begins with a dedicated customer base and a tremendous amount of data previously acquired.

In contrast to Fintech, TechFin is well-positioned to collaborate with mainstream banks and financial institutions.

TechFin, with its loyal customer base and data, is in a better position than Fintech to challenge traditional banks and financial institutions. This is not lost on the incumbent financial services firms partnering with internet titans, even if it means sharing important data and distribution income. Typically, TechFin begins with payment solutions and then adds supplementary products and services to earn more revenue.


In conclusion, grasping the disparity between fintech and techfin is essential for comprehending the transformation taking place in the financial services landscape. Fintech is a disruptive force led by agile startups, employing technology to redefine financial processes and empower consumers. Techfin, on the other hand, encompasses established technology companies expanding into finance, capitalizing on their technological dominance to provide integrated financial services. By referring to reputable think tanks such as the World Economic Forum, Brookings Institution, and McKinsey Global Institute, we can gain valuable insights into these concepts and appreciate the significance of their impact. As we navigate the digital age, understanding fintech and techfin will be crucial in adapting to the evolving financial ecosystem and harnessing the benefits they offer.

The fintech revolution is well underway, transforming the way we interact with money and financial institutions. Fintech companies are challenging traditional banking models and providing innovative, user-centric solutions that cater to the demands of the digital era. While techfin companies bring their existing technological prowess to the financial domain, it is the fintech startups that are driving the true disruption. As consumers and businesses embrace these advancements, the future of financial services will undoubtedly be shaped by fintech innovation, paving the way for a more inclusive, efficient, and technology-driven financial landscape. References:


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