Fintech companies are born to offer financial services with an excellent technological base. Such companies are focused on the client and his needs. But how is fintech different from a regular bank? We will talk about this and much more in this article.
What is fintech?
Fintech is a new technology company based on specialized software and algorithms designed to improve and automate the provision and use of financial services. Such modern technologies have led to the emergence of new business models, start-ups, and other products. You can check out the list of the best fintech software companies.
Fintech categories
Various categories in the fintech sector can be summarized as follows:
- loans;
- Financial infrastructure;
- Distribution of financial products;
- Personal finance;
- Neobanks;
- Negotiation;
- Financing;
- Investments;
- Payments.
As you can guess, fintech is not a bank. They are more flexible, given that their infrastructure is much smaller and therefore versatile, and they are customer-centric. They aim to focus not on earnings, but on customers. They want to make it convenient for users to perform all operations.
Neobanks
Neobanks are that part of fintech that can be as similar to banks as possible, but they have a mobile-first focus, but do not have a license, so they act as intermediaries between users and banks.
Candidate banks
On the other hand, there are pretender banks that have a banking license but offer innovative, fast, and personalized products thanks to their technology.
But this is not a threat to banks. These types of companies are more focused on alliances and collaboration.
Differences between fintech and a bank
- Fintech companies specialize in different areas that the bank offers. That is, a bank can offer more services to customers than a fintech company, thereby creating cross-selling between products, which does not happen in fintech companies. On the other hand, fintech cannot solve the global problems of users, unlike a bank.
- Banking has traditionally suffered from a lack of transparency, which creates a negative experience for customers. This is the point where fintech focuses its efforts by being as clear as possible and putting the customer at the center of its business.
- As we have said, fintech companies are more agile and revolutionary thanks to more manageable infrastructure.
- Given the technological nature of fintech, they are more geared toward an audience between the ages of 20 and 45. That is, people who often use modern technologies and developments;
- In terms of customer knowledge, and while it is true that banks have personal contact with customers, fintech companies gain more customer knowledge through technology, monitoring, and analytics, thus offering their customers customized products and the very best solutions;
- Fintech companies are also more flexible when it comes to responding to customer needs or requests. In many cases, this happens in minutes or even seconds thanks to technology and artificial intelligence.
- Fintech companies have lower costs because they do not depend on branches, which allows them to offer more affordable products.
- Fintech services can be used 24 hours a day, 7 days a week.
- And finally, one of the most distinctive words, as you can guess, is the technology used.
Therefore, if you are thinking about choosing a fintech or a bank, then it all depends on the goal you are pursuing. We can say with confidence that fintech is a completely new direction that has already managed to revolutionize the financial sector. Therefore, such technologies deserve attention.
