TechFin: the financial industry’s new challenger
In the past few years, changes have been happening in the financial industry all over the world – especially after the global pandemic. The finance sector has faced several challenges, including the rapid development of technology in response to changes in consumer behavior and the evolution of business ecosystems.
As one of these new challenges, TechFin will play an important role in the financial sector in the future. This article discusses examples of TechFin, how it will affect FinTech, and the ways that the financial industry can adapt to TechFin’s impact.
What is TechFin?
TechFin refers to companies which operate in the technology industry before eventually expanding their operations to include financial services. A well-known American TechFin company is Google, which originated as an online search engine before extending their business in 2015 to include the brand’s mobile payment service, Google Pay.
Other examples include China-based TechFin companies, Baidu and Tencent, which are both now important players in the international market. These TechFin companies started out as social media platforms and now provide users with mobile financial services.
In Thailand, people might be most familiar with TechFin in the form of Line Pay – a smart wallet service provided by the popular messaging application, Line, which currently boasts over 47 million users.
What is FinTech?
In contrast, FinTech refers to businesses in the financial industry which utilize technology and innovation to continuously improve the quality of their products. An illustration of this is the introduction of mobile banking by almost all banks to help their consumers carry out financial transactions with even greater convenience and efficiency.
Among Thai Fintech companies, one of the rising stars is Stock Radars, an application that helps investors search for interesting stocks in the market. The application also automatically searches for any unusual share purchases or sales in order to immediately notify users, eliminating the need for users to waste time watching their screens.
There are also several famous FinTech businesses in other countries, such as Paypal, which is an online payment platform that allows different types of financial transactions. By linking a user’s account to their banking information, credit cards or debit cards, Paypal provides easy cross-border payments for goods and services.
TechFin – a new challenge for FinTech
The difference between a TechFin company and a FinTech company lies in their origins. TechFin companies start off in other industries, before utilizing cutting-edge technology to enhance user experience by adding financial services. Meanwhile, FinTech companies begin with financial services and then later introduce technology to their transactional services to lower costs and expand their business.
TechFin companies are usually leading technology giants at a global or regional level, including Facebook, Google, Tencent or Line. These companies possess vast amounts of user consumer data as original capital, which can include data on online media consumption, spending habits, and personal lifestyle.
Furthermore, technologies such as Open Banking and Application Programming Interface (API) help applications provided by businesses in all sectors – including TechFin – to connect to services and financial transaction databases provided by banks. Therefore, TechFin companies can use this valuable innovation and data to create their own products to easily answer their customer’s needs.
With all its advantages, TechFin has become one of the greatest challengers in the financial industry, especially for companies that have been operating before the digital age. The challenges facing the industry are only exacerbated by changes in consumer behaviour. This is especially true with younger generations who are accustomed to and respond quickly to new technologies, increasing the probability of consistent growth of TechFin companies in the future.
How can FinTech adapt?
The financial sector must adapt and change its methods of providing services. Instead of continuing to rely on services at physical branches, financial businesses should use modern technologies to highlight a range of digital products that are more suited to answering each customer’s specific needs.
The financial sector can also greatly benefit the management practices of technology companies. With real-time data analysis that can accurately predict and match their customer’s demands, financial service providers can boost their development of new innovations.
Another way financial businesses can adapt is to increase cooperation with FinTech and TechFin companies. By forming business partnerships in these innovative industries, financial businesses can share responsibilities and rely on FinTech’s and TechFin’s respective strengths, to achieve sustainable growth in the challenging and exciting financial ecosystem of the future.