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BusinessNovember 23, 2022by Research Team0

FinTech is here, but TechFin is the next disruptor

The financial industry has experienced a lot of disruption from mobile banking to digital currencies. FinTechs, which took off right after the Global Financial Crisis, have been part of our lives owing to their flexibility and ability to efficiently deliver financial services by using technology solutions while offering a better customer experience.

Of late, there has been a lot of buzz around TechFins. And it is not just FinTech backwards, but the name of a financial service, such as mobile payments, online banking, and peer-to-peer lending, being provided by tech companies with a large existing user base. They differ from FinTechs in their business, business model, and core offering.

Basically, these companies have their origin in the tech industry and started offering financial services as a logical extension to their existing tech platform, having expanded from the payment business to lending, insurance and investments.

Examples include Google, Amazon, Facebook, and Apple, collectively known as Gafa, from the US, and Baidu, Alibaba, and Tencent, or Bat, from China, among others.



Compared to FinTechs, TechFins are better placed to challenge legacy banks with a wealth of data and a large customer base.

These companies are leveraging their existing consumer base and behavioural data collected over the years to develop better payment solutions. In other words, they are driven by platform-centric data-driven business models and it is this which distinguishes them from other businesses.

While both FinTechs and TechFins embed payments and financial services into their products to make them more attractive, the business model of the latter does not depend on the margin in those financial services. As an Economist article noted, “Amazon wants payments in-house so users never leave its app”.

Since the business model is independent of margins generated from financial services, their ability to disrupt is much higher and they are a bigger threat to banks than FinTechs. According to Accenture, the players would shrink the payments revenue pool for banks by 15 per cent by 2025 and may cost up to USD 280 billion in revenue opportunity loss globally.



1) TechFins have an offering/platform that the users are familiar with and hence, the entry barrier for providing financial services is not big. For instance, Google has a strong user base already and using Google Pay only requires the user to sign in through the Google account and enter card details, which is much more convenient compared to having to download and register with another app, such as PayPal.

2) These companies have access to a large amount of information and data. They can engage more efficiently with the users, who have already spent a lot of time on the platform, and also understand their behaviour. This allows them to produce an appropriate experience for their consumers with alternate data analysis providing better insights into their preferences and risk profile.

3) They are already well-versed in technology and have the resources to enter this market. They are more skilled and deep insights on the customer through analysis of unstructured data allow them to launch niche products while providing better solutions to larger consumer bases.



TechFins are disruptors with the potential to access a large number of users and drastically change their daily lives. They will increase competition between themselves, FinTechs and traditional financial service providers.

FinTech startups begin by pinpointing inefficiency in the processes and bettering the financial services by removing it through APIs, artificial intelligence, blockchain, and other technologies. In the absence of customer data, brand loyalty, and massive financial sources for developing solutions, some fintech companies prefer to partner with traditional financial companies (TSB Bank and Aptap) or sell themselves to another financial company (JP Morgan acquired WePay).

Techfin ecosystem, on the other hand, comprises a customer base that is willing to experiment, a strong technical infrastructure and a better mechanism of data management. In addition, there are hardly any legality roadblocks as the level of regulation levied on tech firms entering the finance domain is the same as the institution offering financial services using technology.

The players are now slowly dominating this space through complex analysis to understand customer preferences and a serious investment in innovation.

Besides building their offerings, some global tech giants are also offering specific tools using artificial intelligence and machine learning to financial institutions.

Nonetheless, older financial institutions, such as banks, have their own advantages, especially in areas of financial expertise, security, governance, risk management and regulatory compliance.

However, there is a danger of losing out on margin and getting confined to commodity business with TechFins dominating their customers. Amid changing times, slowly but surely, banks are opting for collaborations with such firms, contributing to the financial industry by providing innovative solutions, to be able to work faster, accept new ideas and develop technology.

Going forward, the AI journey for traditional institutions is not just about adopting tech innovation but also calls for a bigger cultural and structural change.

And the biggest beneficiaries of this constant endeavour for a more efficient system for providing financial services are the consumers.



According to Boston Consulting Group’s forecast, payment revenues globally could grow to USD 1.8 trillion by 2024, which reached USD 1.5 trillion in 2019.

It is expected to expand by a CAGR of 7.3% from 2020 to 2025. Growth is expected to continue at nearly the same pace for the remainder of the decade, and it is expected that the total revenue pool would reach USD 2.9 trillion by 2030, with a CAGR of 6.4% from 2025 to 2030.

Likewise, McKinsey in its Bank Pulse study 2021 predicts payments revenues would grow to USD 1.6 trillion by 2025.

The number of digital wallet users is also likely to grow by more than 53% to exceed 5.2 billion globally in 2026. Paying with QR codes is also gaining momentum. The global QR codes payment market was valued at USD 8.1 billion in 2020 and is projected to reach USD 35.1 billion by 2030, growing at a CAGR of 16.1% from 2021 to 2030, according to Cognizant—State of Global Payments: Industry Analysis.

Similarly, IDC forecasts that 73% of global consumer payments will be processed by non-FSIs on the Internet of Payments (mobile, smart and connected devices) by 2030. If they are unable to configure new payment models and revenues from data and partnerships, FSIs will surrender much of this payment revenue to more innovative and agile players.

Therefore, it would not be surprising to see more cooperation, partnerships, and M&As between FinTech companies, TechFin companies, and FSIs in the future.


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